Chatting With News Corp's Rupert Murdoch

For the final session at D: All Things Digital today, Walt Mossberg and Kara Swisher are interviewing News Corp. (NWS) CEO Rupert Murdoch, who of course owns the Wall Street Journal, Barron’s, this blog, and a lot of other things.

It was a wildly entertaining, freewheeling discussion, which featured Rupert offering opinions on everything from the Microsoft/Yahoo talks (he thinks they should deal) to the election (he thinks Obama is going to win) to the economy (he sees a long recession ahead). Here’s a rundown:

• Mossberg is asking what Rupert thinks about the future of print newspapers. Murdoch: I just love communicating with people; newspapers is a way of doing it. I don’t care what platform our news appears on. Across the country today, some people share that view, and others are just frightened. All of them are going to have a hard time. Average newspaper down 10%-30% in total ad revenue, and that means their profit margins. They have made every economy possible in production, but not in journalism. They are going to do that. It gives a huge opportunity for the Wall Street Journal. A paper’s servicing the 10% of the most influential, most educated people in a community is a huge opportunity. I think print will be there. We’ll have a big wide free site, but when you get into what we have today, with a lot of analysis and detail, people will pay for that.
• On whether to make WSJ.com paid or free: I think the high quality - way over 1 million people will pay a lot more. They can pay $150 a year - they’re now paying $50. People want to read it every day. They need to read it.
• Mossberg notes that 20%-30% is free stuff. Murdoch says it is a lot less than 20%. We’re going to broaden it out so commodity information will be a great site, free. Already at 15 million uniques now, with 1.1 million paying subscriptions.
• Swisher wants to know what will be in the gated area. Murdoch says there will a lot of what’s in the paper, a lot of detail, a lot of personalized service. We have 2,000 great journalists. Barron’s sells 300,000 copies for $5; people need it, because it moves markets on a Monday morning. (Thanks, Rupert.)
• Murdoch says every story in the Journal is typed or edited by 8.3 people. That’s ridiculous. The story gets longer and longer and longer. There is not a story you can’t get all the facts in in half the space. To Mossberg: I’m not talking about your column. It’s digestible, it’s short, it’s right. If the whole paper was like that, I’d be a happy man.
• Murdoch says they get $125 a year for the average subscription for the Journal; the Times gets over $500. They discouraged people paying by credit card; people were paying by check. The New York Times (NYT), its a monthly thing on your Visa card for 40 or 50 bucks.
• Worried about the brand: I think it can be better in finance, and it will be. But we will add to that general and international news. It is important to businessmen to know what’s going on in the world. We have 100s of correspondents all over the world and they never get copy into the paper.
• Murdoch says we may affect the Times, they’ll react, and you will see emergence of two very strong national papers.
• Why will people stop reading both? Murdoch says it is a time think. People spend 30-40 minutes in the morning looking at the Journal or the Times or both, online.
• Why did you pick MySpace? Murdoch: We decided we had to act fast, started looking, found Intermix, which owned MySpace, which was 3 days away from being acquired by Viacom. We went into a room and came out with the company.
• On the Microsoft (MSFT)/Yahoo (YHOO) situation: I’m mystified. I can’t understand the whole thing. Jerry Yang is a friend, but unfortunately, he only owns 5%. Someone offers a price which the vast majority of holders said give me quick. He managed to hold them off. He said it would take another few bucks - basically another $8 billion. Microsoft decided to back off. That also mystifies you? “Absolutely.”
• What happens there now? I think they are going to find some other way. There is a deal ready for them to sign with Google (GOOG). There is a real regulatory risk for everyone in this. It would be sad if they did a deal with Google and it got held up for 12 months, while Google continued to eat their lunch. Google is gushing money. You can see exactly why Microsoft is worried. Ballmer is not without ambition, they have huge amounts of money, but they see the danger of it turning on them.
• I think I would go back to my $33, or $34. And clean it up afterwards.
• On Icahn: he wants to make a few hundred million for himself.
• On News Corp.’s role: Had held vague talks going back to Terry Semel’s day. There was a possibility at one stage that we would put in MySpace to add to the portal, but that seems to have gone away.
• On Facebook vs. MySpace: I think that it is no longer true over last 6-12 months that you hear more about Facebook. By any measurement, we are 2-3x as big. There were 22 million uniques when we bought it, and now there are 120 million. We have twice as many uniques in this country by any public measurement. And users stay an hour a day longer. We’re about personal expression, people reaching out, looking for other people, a true social network. In Iraq, all of those people were on MySpace, trying to find people to talk to in this country. Murdoch says 45% of MySpace users are over 35. 45% of all the mothers in America are on MySpace.
• Where is MySpace going? It can develop enormously around the world, a great platform for other News Corp. properties. We just about cover the world, with newspaper, satellite, television.
• Did you consider buying Bebo? Not at that price.
• They already have 5 million bands on Myspace.
• Television: Started Hulu with NBC. Why did you start it? Murdoch: We’re putting more and more and more content every week. We wanted to control our own content.
• People will still prefer to watch on a big screen television rather than watching on the computer. You can transfer Hulu to a TV. We want to monetize our copyright, whether old programs, or long tail, rather than let someone else do it.
• On digital movies, and the future of theaters: If there are good movies, people want to get out of their homes occasionally. I would love to see all windowing of movies closed; but there are lot of vested interests, like the owners of cinemas. It will all change. Every studio wants to close the window as far as possible
• We like to make good movies that we’re proud of, whether for $10 million or $200 million. But he says they run their movie studio very conservatively, and the their movie business is very profitable.
• Can you imagine a movie or TV series for the Internet? It is possible, but no one has had the courage to do it yet.
• Murdoch says they do a lot of stuff for mobile - mobisodes.
• On social networking advertising: We’re pretty happy. We budgeted this year to be up like 80% in Fox Interactive Media, which includes MySpace and some other properties. They had expected $1 billion this year, but will miss by about 10%. That’s still $900 million.
• Big advertisers have come in over the last six months, Toyota (TM) , Johnson & Johnson (JNJ), Nordstrom (JWN).
• Could Google be a monopoly? I think Steve Ballmer is perfectly right; he wants to engage them at their own game, and see if he can damage them there. He’s going after Yahoo to get some critical mass.
• Murdoch on Fox News: He says O’Reilly actually gives both sides, all the time. Mossberg says he gives both sides, but kicks the crap out of one of them.
• Walt and Kara want an O’Reilly from the left. They want him to hire Keith Olbermann; Murdoch says he fired him five years ago.
• The election: I think you have two candidates in Obama and McCain who both have a lot of problems. Politicians and Washington are despised by 80% of the public. Obama is a rock star. Mossberg says he drew 75,000 people for a rally in Portland, Oregon. Murdoch says he has problems in Florida…people are going to want to throw out the incumbent party. You have the Obama phenomenon; undoubtedly a recession, everybody getting hurt financially, and that all bodes well for him. On McCain: he has been in Congress a long time. You have to make too many compromises. He’s a patriot, a decent guy…He does not have much of an campaign. I think he has a lot of problems. I want to meet Obama. If you read his education policy, it’s just great. The education system in this country is a total disgrace. Kids are dropping out of high school and not graduating, and being sentenced to be a permanent underclass.
• When will Hillary drop out of the race? Every one of her friends is saying for God’s sake get out. Bill is telling her to stay in. I think Obama would never give her the number two spot. He’s a highly intelligent man, with a great record at Harvard, and so on. I just think he is as good as he promised.
• Did you have anything to do with the New York Post endorsing him in the New York primary? “Yeah,” says Murdoch.
• On the economy: The average family is squeezed to death, living hand to mouth. For the most part, the country is suffering terribly, and people are cutting back. The next thing you’ll see is some unemployment. Starting to see it in England. Most of Europe is negative or flat. Australia is still booming, because it is like one big quarry for China and India. There’s a lot to put right, he says. We’re going to be dependent on oil for a long time. Will take 10-15 years for investment in nuclear and wind and others to take effect. We’ve got to do something about it right here and now. I would let people drill off the West Coast. We didn’t buy Alaska to save a couple of elk. Long-term, I’m very optimistic. There are 6.5 billion people in the world; 3.5 billion engaged in the economy. There is going to be inflationary pressure; the world is getting wealthier and wealthier. For at least 18 months, this country is in for a very hard time.
• On the Internet: we have about 100 million uniques with our newspapers; bring those together, make them make money.
• What metro newspaper should do: They will have to live with 10% margins instead of 30% margins. Some will go away. There’s a lot of challenges. You have to give people what they want to read.
• Murdoch says he has not decided who to vote for in November. I wonder what Bill O’Reilly would think about that.

Comments

[Lisa]

Fantastic summary -- really worth reading. Thank you!

One comment on this:
"Murdoch says every story in the Journal is typed or edited by 8.3 people. That’s ridiculous. The story gets longer and longer and longer. There is not a story you can’t get all the facts in in half the space. To Mossberg: I’m not talking about your column. It’s digestible, it’s short, it’s right. If the whole paper was like that, I’d be a happy man."

What concerns me about this is that if everything gets shortened it gets dumbed down. The WSJ is great because its articles are long.

[DavidJackson]

Excellent article. What also comes through is what great interviewers Walt Mossberg and Kara Swisher are.

[FilthyLucre]

Lisa, Murdoch's ridiculous statement also caught my eye.

I have never been able to forgive Murdoch for dumbing down U.S. news coverage since his entry into the U.S. media market.

I find U.S. tv newscasts impossible to view because they are so devoid of content.

[Sgt.Sally]

Murdoch will burn in hell for subverting the free press in the United states.