Can Rupert Murdoch hold on to Kara Swisher?

August 28, 2013

Who is the best journalist (so far) of the new millennium? Who has best embraced the opportunities afforded by digital media, and used them to deliver breaking news and incisive opinion to the greatest effect? Put like that, it’s hard to wind up with any name other than Kara Swisher.

As David Carr and Jay Rosen will tell you at length, we live in a world of the opinionated scoopmonger — a world where a handful of brand-name journalists, wearing their opinions proudly, create a virtuous cycle of news. Ezra Klein is a good example: he is both very smart and incredibly well-sourced in Washington, which in turn lends a lot of credibility to his opinions. Because policymakers read him and respect him, they reach out to him and talk to him — which in turn gives him insight, for his opinions, and also scoops, which only serve to consolidate his importance.

Klein is in the process of building out his Wonkbook brand at the Washington Post: he’s one of a handful of what Jack Shafer calls the Marquee Brothers. Among the others: Andrew Ross Sorkin, Andrew Sullivan, and Nate Silver. All of them have strong personal brands, but only Klein is a true double threat, on both the opinion and the news-breaking front: Sullivan and Silver are read for their analyses, not for any news value they might have, while Sorkin, for all that he has a high-profile weekly column in the NYT, is still valuable mainly for his sources and the access (and information) those sources will predictably give him over any of his rivals. Indeed, there’s a case to be made that Sorkin’s column is in large part a means of buttering up the sources he’s looking to get scoops and access from in future.

There’s value in all these models, and Sorkin’s in particular is not to be sneered at. But if you can master the dual arts of both analyzing and breaking important news, and if you can do so faster and better than anybody else, then truly the journalistic world is your oyster. Klein is good, when it comes to such skills. But Swisher is better. Her analysis is more interesting, and more pointed; her news scoops are hard, rock-solid items about boards and deals and companies, rather than being softer, more conceptual pieces about things like who’s the front-runner to take over the Fed chairmanship.

On top of that, Swisher, along with her partner Walt Mossberg, has been building the All Things D brand for much longer than Klein’s been building Wonkbook, and they’ve created a true force in Silicon Valley. They’re not some buried section of, in the way that Wonkbook is part of the Washington Post or Five Thirty Eight and Freakonomics were part of the NYT; they’re an editorially independent, non-paywalled force of nature, competing aggressively against any and all journalists in other parts of their parent organization. People want to know what Swisher and Mossberg — and Peter Kafka, and Jason Del Rey, and Liz Gannes, and the rest of the ATD editorial staff — have to say. They love the way the site is designed, and the way in which it’s open to featuring many voices from outside News Corp. They’re reassured by the site’s editorial transparency, its writers’ detailed codes of ethics, and the fact that over many years it has proved itself to be extremely reliable in reporting the news. And, of course, they come back regularly to read the constant stream of scoops that ATD serves up.

Swisher, then, has created not just an amazing personal brand, but also a highly enviable corporate one. ATD is in many ways the most glittering digital jewel that News Corp owns — much more than its 5% stake in Vice, or the also-ran website, or any of the stuff that gets hidden behind various paywalls. But according to Fortune, there’s now a real possibility that News Corp is going to allow Swisher and Mossberg to slip out of its grasp:

Reuters reported in February that AllThingsD co-executive editors Kara Swisher and Walt Mossberg had begun discussions with owner Dow Jones, a subsidiary of News Corp, about either ending or extending their partnership, which is set to expire on December 31.

Since then, Fortune has learned that AllThingsD is working with investment bank Code Advisors to find outside investors at an enterprise value that could exceed the $25 million that AOL reportedly paid in 2010 for rival site TechCrunch. One source says that the asking price is between $10 million and $15 million for a 25% or 30% stake in the company…

Dow Jones officially owns the AllThingsD brand, website and content. It also manages the site’s ad sales, but only Mossberg is an actual Dow Jones employee. Swisher and the rest of her AllThingsD editorial colleagues are contractors paid via an independent limited liability company. One scenario could involve the AllThingsD team leaving to start an independent venture with a new name, while Dow Jones retains the AllthingsD brand (and possibly the archived editorial content).

What’s happened here is that Swisher and Mossberg have created something with substantial value — as much as $50 million. And since the value lies with them, rather than in the ATD brand, they can walk away and find a strategic partner willing to invest an eight-figure sum in creating a new, entirely independent brand. That’s got to be attractive to them, for two reasons: firstly, they would become truly independent, and in control of their own destiny. No more begging their New York paymasters for extra investment: if they own the company, they can make all those decisions themselves. And then, of course, there’s the money: if they each own say 25% of a $50 million company, that’s a lot of paper wealth which they’re never going to accumulate working for News Corp, and which — in the way of Silicon Valley — could become worth much more still if their expansion plans work out the way they hope they will.

Meanwhile, Rupert Murdoch stands firmly on the other side of the Great Paywall Divide, and feels as a matter of principle that all of his properties (except, perhaps, should charge readers for their content. He’s also human, which means that, like all other humans, he’s deeply reluctant to pay a large amount of money to buy something he already owns.

Murdoch, by rights, should be able to retain control of ATD, complete with Swisher and Mossberg. They’re offering very little to his rivals: a minority stake, no editorial control whatsoever, and probably very little cashflow, at least for the first few years, since as a startup they’re going to want to reinvest all of their revenues back into their company. Meanwhile, News Corp has the opportunity to own ATD 100% (indeed, it already does), and can offer Swisher and Mossberg the ability to invest in the site without having to go through the hassles of rebranding and relaunching. Given the economics of control premiums, Murdoch should easily be able to promise significantly more resources than his rivals can come up with.

But after years of writing the entrepreneurial gospel, it’s understandable that Swisher and Mossberg might want to live it for themselves. And they’re both wealthy enough to afford a few years of startup wages: Mossberg has been one of Murdoch’s highest-paid print journalists for years, while Swisher, who’s well paid herself, is also married to long-time Google executive Megan Smith.

Swisher and Mossberg built the ATD franchise as far away from New York and Murdoch’s interference as they could — they based it in California, and refused even to share back-end technology with Dow Jones. That decision was smart: one look at The Daily shows what happens if you’re too close to the man himself. They don’t need News Corp — but if News Corp aspires to be a real force in digital media, it really does need them. The digital world is closer to TV than print, in terms of the importance of talent management and talent retention. If Murdoch and his dealmakers can’t hold on to Swisher and Mossberg, News Corp’s digital future looks pretty bleak.


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