Opinion

Jack Shafer

The Daily didn’t fail–Rupert gave up

Jack Shafer
Dec 3, 2012 22:15 UTC

When you’re as wealthy as Rupert Murdoch ($9.4 billion) and you control a company as resource-rich as News Corp (market cap $58.1 billion), shuttering a 22-month-old business like The Daily doesn’t signify failure as much as it does surrender.

Murdoch knew what he was getting into when he launched the iPad-only (and then smartphone, Android tablet, and Kindle Fire) publication in February 2011. At a press conference, the mogul claimed to have invested $30 million pre-launch and assumed running costs of about $500,000 a week. According to a report in the New York Observer, attributed to a “source,” the operation was amassing annual losses of $30 million. But again, for someone like Murdoch, $30 million is chump change. His New York Post loses up to $70 million a year, according to some accounts, and you don’t see him closing it. Such losses are rounding errors in the company’s entertainment budget.

To place The Daily venture in scale, the last attempt to start a national, general-interest print newspaper from the ground up—USA Today—lost $600 million over the course of a decade before turning its first profit in 1994. (In today’s money, that’s more than $1 billion.) The National, the national sports daily, lost $150 million (about $250 million, corrected for inflation) in 18 months before closing in June 1991. In the late 1990s, when Murdoch was trying to crash the China satellite TV market, he had invested $2 billion and was losing $2 million a week according to his former right-hand man in that enterprise. So, please, let’s not obsess too much over Murdoch’s squandering of $30 million a year on a failed experiment. In the history of journalistic bets, this was a trivial gamble.

There are almost as many diagnoses of what killed The Daily as there are dollars lost. And most of them are right.

Peter Kafka captures the corporate reason behinds its demise, writing today that the split of News Corp into two companies—a newspaper company into which The Daily was corralled; and a broadcast-film group–meant that the struggling titles in the Murdoch portfolio would have to perform or face ejection. My colleague Felix Salmon cites the structural “impossibility of tablet-native journalism” as the cause of The Daily’s death: that is, the iPad is a clunky vehicle for a package like The Daily, inferior even to newsprint; the Web is more a flexible and easier platform on which to develop content; and Murdoch failed to “leverage the wealth of rich and valuable content within News Corp” into The Daily. Former Daily contributor Trevor Butterworth, among others, faults the paywall, complaining that you can’t create demand for a new Internet brand that you’ve sequestered behind a paywall. Philip Elmer-DeWitt of Fortune claims to have had a vision of The Daily’s funeral at its birth. Tom McGeveran at Capital New York offers that The Daily would have survived had it given Murdoch the same “voice” and influence as the New York Post, the Wall Street Journal, and his British tabloids give him. Alex Wilhelm of The Next Web points to, among other things, the steep 30 percent vig that the iTunes Store was collecting on subscriptions.

The leadership lessons of Chairman Rupert

Jack Shafer
Jun 26, 2012 19:56 UTC

This piece originally appeared in Reuters Magazine.

Rupert Murdoch has endured more crises during his 80-plus years than Richard Nixon and Odysseus combined, so the CEO and chairman of News Corporation can be forgiven for seeming nonplussed by his current predicament. He took over the family newspaper business in Australia at 21, when his father died, and expanded it. He fought the British unions in 1986 and won. He repelled the bankers in 1990, when he was close to insolvency. He has survived two divorces, the purchase and sale of MySpace.com, a bunch of other digital disasters, and even the predations of John Malone, who threatens Murdoch family hegemony with his purchase of News Corp stock. And now, referencing his media empire’s latest fiasco, the British Parliament has deemed Murdoch “not a fit person” to run an international company.

If Murdoch were the sort of pompous captain of industry who collected leadership maxims, Look for Trouble would likely top his list. He craves competition, and has repeatedly bet his company on new ventures like 20th Century Fox, the Fox Network, NFL football and his satellite operations.

Most chief executives think rewarding stockholders is their primary job. Not Murdoch. The Murdoch family owns the controlling shares in the company, so the chairman can largely ignore Wall Street to pursue a strategy that stretches across decades, not quarters. Yes, he’s impulsive, but creatively so.

Rupert Murdoch’s escape act

Jack Shafer
May 1, 2012 21:49 UTC

The publication today of Parliament’s 121-page report (pdf) on phone hacking has the British press all but publishing obituaries for Rupert Murdoch. The report damns him for turning “a blind eye” to the scandal of phone hacking at his companies, News Corporation and News International.

Murdoch is not “a fit person to exercise the stewardship of a major international company,” the report concludes, leveling a hammer to the media baron’s head. As the Telegraph interprets this finding, BSkyB, the UK satellite broadcaster that Murdoch owns 39.1 percent of, is “vulnerable” to a challenge from the regulators at Ofcom. If the regulators applied their “fit and proper” test to BSkyB, they could cancel its broadcasting license, order News Corp. to reduce its holdings in the broadcaster and oust Rupert’s son James Murdoch from its board of directors. The BBC seconded the Telegraph‘s take, and the Telegraph and the Guardian speculate that the report will echo in the United States, triggering criminal prosecutions and unending damage to Murdoch’s corporate reputation here.

Murdoch’s corporate counterattack today states that News Corp. has “already confronted and … acted on the failings documented in the Report,” insisting that the company has righted all the wrongs. In a memo to his 50,000 employees, Murdoch remained defiant, minimizing corporate wrongdoing and maximizing the corrective measures his company has taken.

Who cares if Murdoch lobbied?

Jack Shafer
Apr 25, 2012 20:51 UTC

Pummel Rupert Murdoch and his minions all you want for News Corp.’s phone-hacking of celebrities and crime victims, its computer-hacking, its blagging, its bribing of police, its payments of hush money, its obstruction of justice, and its operation of what former British Prime Minister Gordon Brown once called a “criminal-media nexus.”

But spare me the feigned outrage excited by this week’s interrogations of Murdoch and his son James Murdoch by the Leveson Inquiry into press ethics and practices. The Guardian, the Telegraph and the New York Times, among others, appear to be appalled by news that the media baron lobbied the UK government aggressively so that he could expand his holdings in the tightly regulated satellite broadcaster BSkyB from 39.1 percent to 100 percent. The Times cites subpoenaed News Corp. emails released by Leveson to show a Murdoch lobbyist working “hand-in-glove” with the office of a government regulator.

Isn’t climbing into the skins of regulators the very definition of lobbying? That’s how I understand it. Hate Murdoch all you want, but if you’re invested in highly regulated businesses like BSkyB and you need government approval to invest deeper in the regulated business, then working “hand-in-glove” with the regulators is exactly what the situation calls for. Should the Murdochs have ignored the regulators as they attempted to increase their holdings in BSkyB? Of course not.

Intrigue in the house of Murdoch

Jack Shafer
Oct 19, 2011 21:54 UTC

New York Times reporter Jeremy W. Peters invests 2,400 words today in a Page One story delineating the “rift” between News Corp. CEO Rupert Murdoch and his son and heir apparent, News Corp. Chief Operating Officer James Murdoch.

If News Corp. were a normal company and Rupert Murdoch a normal father, readers might glean from this report that a real power struggle is going on for the future of the company. But News Corp. is not your normal company, Rupert is not your normal dad, and there really is no struggle going on for the future of the company, only a replay of the previous “rifts” that have opened between Rupert Murdoch and his two other children by his second wife Anna—Elisabeth and Lachlan. You see, Rupert sets his adult children up to smack them down.

The first of Rupert’s heirs apparent to suffer the public humiliation of a rift was Elisabeth. In 2000, when she was 31, she escaped the family business. A Guardian story from 2000 about her departure says she was “once tipped as a business successor to her father.” What rattled her was her father’s designation of Lachlan as the new heir apparent. The Guardian continues:

Cop-out in London

Jack Shafer
Sep 20, 2011 20:46 UTC

By Jack Shafer
The views expressed are his own.

What were the London police thinking when they invoked the Official Secrets Act last week to compel Guardian reporters Amelia Hill and Nick Davies to disclose the confidential source for their July 4 Milly Dowler phone-hacking story? Did they think the Guardian would roll over when they arrived in court on Friday to contest the order? That Hill and Davies would submit? That free-speech advocates, members of Parliament, and journalists around the world would pay no mind to the prosecutorial over-reach?

Whatever the Metropolitan Police thought, they’ve rethought it today, announcing that they’re dropping for the time-being their request for a court order that the Guardian give up its sources.

With the perfect vision that comes with hindsight, it now appears that the court order was a bluff. As the Guardian reported yesterday, the Met did not consult the director of public prosecutions before wielding the Official Secrets Act, as the 1989 law requires. He was only consulted on Monday. In other words, the London police went rogue. If that’s the case, perhaps the goal of the cops was to give the Guardian and its journalists a fright and deter other reporters from investigating the pile-up of journalistic malfeasance, crimes by private detectives, corporate malfeasance at Rupert Murdoch’s News Corps., and, of course, bribe-taking by the Metropolitan Police.

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