Saturday, August 22, 2009

News Corp Cuts Cloth as Friedman Moves On

News Corp. has had to act in the face of disastrous results and the press is now awash with stories of their various initiatives’. These include; forming a consortium that would charge for news distributed online and on portable devices, a potential move from ‘fortress Wapping, the sale of their free London paper and a pay reduction for Rupert.

Chief Digital Officer Jonathan Miller is believed to have met with news publishers including New York Times, Washington Post, Hearst Corp. and Tribune. Ever since William Dean Singleton, chairman of the AP and chief executive of MediaNews Group Inc., spoke in April against the "misappropriation" of news on the Internet, the momentum to look at charging has been growing. Robert Thomson, Wall Street Journal has gone as far as to call the news aggregators who believe in free content, "parasites or tech tapeworms in the intestines of the Internet."

Although newspapers have built an online readership, the revenue hasn't followed and Internet ads are still not significant. However, erecting pay walls may prove counter productive and just fuel infringement. Instead News Corp. is proposing a single online registration for readers to use across all news sites and to track the stories each person reads. They believe this accumulated demographic would appeal to advertisers but a consortium of newspaper publishers also risks raising issues of antitrust.

Murdoch needs to move fast to stem the flow of a red balance sheet and wishes the new charging model to be extended to tabloids such as the Sun and the News of the World where they believe they can capitalise on the perceived popularity of celebrity stories, scoops and what some may regard as high reader interest and low quality content.

News Corp are also looking to move from ‘fortress’ Wapping in the East end of London which grew to fame through often violent picketing in 1986. It has apparently agreed to occupy about 180,000 sq ft of the Thomas More office scheme, which is big enough to accommodate the majority of its Wapping workforce. This would free up the Wapping site for residential development but even with the Olympics in 2012 the timing in the current climate may prove a bit premature.

Mr. Murdoch’s son James has announced that they plan to close the 3 year old London Paper, which posted a $21 million pre tax loss for the year. The London Paper handed out over 500,000 copies a day, compared with 400,000 for the free London Lite, which is owned by Associated Newspapers. Mind you giving away papers is easy so the numbers are irrelevant really.

Cuts at News Corp. have included large-scale job losses at the social networking website MySpace. In response the 78-year-old Rupert Murdoch's pay has apparently dropped 28% down from $27.5m, to $19.9m (£12.1m) . Although Murdoch's base salary of $8.1m remained unchanged, his performance-related bonus slumped from $17.5m to $5.4m. He did received a $6m in pension contributions and share awards and his son James Murdoch, who oversees News Corp's operations in Europe and Asia and chairs BSkyB television, saw his total remuneration drop from $10.9m to $9.2m.

Finally. Just as if the news wasn’t bad enough, OpenRoad Integrated Media, a new New York based eBooks marketing and publishing start-up, has raised $3 million in funding. What is interesting is that the company was founded only this year by Jane Friedman, former CEO of HarperCollins Publishers Worldwide. She left Murdoch last year and with Chris Lederer, former CMO at HarperCollins aims to go beyond books into “integrated media”. So even Rupert’s ex employees are now striking out to make it on their own.

So where is HarperCollins going and is it a long term News Corp asset or a liability in these changing times?

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