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Mystified by MicroHoo: Rupert Murdoch, Chairman and CEO, News Corporation

Rupert Murdoch

As chairman and CEO of News Corp. (NWS), Rupert Murdoch commands what may be the world’s most powerful media empire, spanning movie studios, television networks, newspapers and a growing stable of Internet properties, including the wildly popular MySpace social network. In 2007, he purchased Dow Jones, which owns The Wall Street Journal and, as well as this conference and its associated Web site, Mr. Murdoch, an Australian by birth and an American citizen, is a graduate of Oxford University and a canny, outspoken and often controversial business executive. He has a personal passion for news and a deep interest in the transition from traditional print and broadcast forms of journalism to digital formats.

  • Walt and Kara return to the stage to introduce the final guest of the evening, Rupert Murdoch, Chairman and CEO, News Corporation. They note that they’ve been trying to get him as a guest for years and he didn’t agree until he actually acquired the company. And here he comes…
  • Kara: So, you enjoying yourself? Murdoch: Yes. Kara: Good. Let’s get into it.

    Rupert Murdoch at D6

  • Walt’s first question concerns newspapers and their future. Murdoch says he loves news itself, he doesn’t care how it’s delivered. He notes that the average newspaper in the U.S. is down 25% to 30% in revenue, though they’ve made every economy possible in production. Now, they’re turning to making cuts in journalism, which is a huge opportunity for a paper like the Journal to fill in the gap.
  • Kara notes that Murdoch has changed his tune about online subscriptions (there was talk that he was going to make the Journal free; now, it looks more like a part-free/part-paid model). Murdoch agrees, adding that people with money, sitting in Florida in a nice house, want to read the Journal every day and they’re willing to pay for it.

Rupert Murdoch at D6

  • Walt asks about the lack of clear delineation between the Journal’s free content and its subscription content. Murdoch says he’s working to clarify that division and maximize its effect. He notes that the Journal has seen a great increase in unique visitors since it made more of its content freely available.
  • Kara: How will you make the Journal better? Murdoch says Journal stories are too long and edited by too many people. Walt’s column is the exception, he jokes.
  • Murdoch says that the average Journal subscription brings the company just $125. The New York Times collects almost $500. He seems to be saying that the Journal’s payment-processing system is antiquated and that the paper has lost readership as a result.
  • What will he add to the Journal? Murdoch says more financial news, more international news. Businessmen need and want international news, so the Journal needs to deliver more of it.

  • Walt wonders: Is Murdoch’s focus on broadening the Journal’s content and shortening its stories fueled by the belief that people don’t want to rely on too many different publications for their news? Murdoch says it is. Seems to feel that there will be a day when there will be two big news publications (the Journal and the New York Times) and people will read one or the other.
  • Moving on to the online business … News Corp. was early to the social-network business. Why did you pick MySpace and why did that area interest you? Kara asks. Murdoch says the company actually came to the space late. Points out that when he approached MySpace, it was just days away from being acquired by Viacom (VIA).
  • Walt: That’s not at all like this Yahoo/Microsoft deal, is it? Speaking of that deal, what does Murdoch think about it? Murdoch says he’s been “mystified” by Yahoo’s (YHOO) response to Microsoft’s (MSFT) offer. “I can’t understand the whole thing, he says.” 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.” What would Murdoch have done in Microsoft’s situation? You offer a huge premium, you fire the gun and you sit and wait, he says.

Rupert Murdoch at D6

  • So what will Yahoo do now? Murdoch says he sees the company trying to appease its shareholders with various new efforts in search and advertising, but none of them working. Suggests that a deal with Google (GOOG) might also be dangerous because if it’s held up because of antitrust concerns for, say, a year, Yahoo will find itself in a very dangerous position.
  • What about the Carl Icahn portion of all this? asks Kara. “That’s not serious … he just wants to make himself a few hundred million dollars …”
  • Walt circles around to MySpace. Notes that Facebook has had quite a bit of buzz lately. Wonders How Murdoch feels about that. Murdoch says MySpace is doing just fine. It’s growing audience. User visits are lengthening. He seems to feel MySpace and Facebook are different beasts. He says that a large portion of MySpace users are over 35.
  • Kara asks how MySpace fits into News Corp.’s business. Murdoch says it’s great because its platform can be extended across various News Corp. properties. Kara asks how he’ll extend the MySpace brand. Murdoch says he’ll do that by taking it to new countries, setting it up in local languages. He mentions India as the latest example.
  • Kara: Do you use MySpace? Murdoch: No. Kara: Facebook? Murdoch shakes head: No.
  • Talk turns to MySpace’s new music service. Murdoch says it’s recalibrated the company’s relationship with the music industry. Before, the two were at odds; now they’re partners.
  • Walt asks about Hulu, notes that it was initially thin on content. Murdoch says the company was more concerned about controlling its copyrights than the breadth of content the service offered. We want to monetize our copyrights, he says. We want to control distribution as much as we can.
  • If that’s the case, says Walt, then why haven’t you sued YouTube? Murdoch doesn’t seem to think it would be worth it.
  • What about the new set-top box Netflix just debuted with Roku. Is there a big future for theatrical distribution of films or are we moving towards a model where we watch movies exclusively in our home? Murdoch says he doesn’t see theatrical distribution going anywhere. Kara asks how he feels about the film industry’s windowing policy. Murdoch says he hates it. He’d love to see films released to all mediums simultaneously. Then why don’t you do it? asks Kara. You’re Rupert Murdoch! Murdoch says he’s not powerful enough. It will happen someday, though, he adds.
  • Moving on to the cost structure in Hollywood. Kara notes that there’s never been an online hit that wasn’t re-purposed from some other medium. Is it possible? Murdoch says sure. But people want to watch video on big screens. Walt disagrees, notes that his sons watch a lot of online video. Murdoch suggests that what they’re watching is probably high-quality video that they paid for. The Mossbergs are ethical, right? he asks.
  • Kara: The Mossbergs are ethical, the Swishers not so much. …

    Rupert at D6

  • How do you look at Google right now? asks Kara. We love them, says Murdoch. We think they’re fantastic, the greatest company in America. But, he says, you don’t want anyone to be a monopoly.
  • Walt recalls Steve Ballmer’s comment yesterday about Google looking more and more like a monopoly to top publishers. What would you do if you were Yahoo? They made a “fatal mistake by not leveraging Overture when they had the chance. They have a huge job ahead of them just to hold onto their 20%. I wish them luck.”
  • Talk turns to politics. Where are we politically, asks Kara. What’s you assessment of the current situation. I think you have two candidates, says Murdoch, and they both have their problems. I think you have a unique situation today, where public opinion of the government and politics is at an all-time low. It’s abysmal, he says. And then here comes this candidate who positions himself as above it all. Murdoch seems to feel that the public will rally this year to elect Obama.
  • Walt asks if Obama can overcome the race issue. Murdoch believes he can. What about McCain? He’s been in Congress too long. He’s a friend, but he’s unpredictable. And he’s got a lot of problems.
  • So who are you backing? asks Kara. I’m not backing anyone, Murdoch says … “but I want to meet Obama. I want to know if he’s going to walk the walk. The educational system in the states is a disgrace. If he wins, Obama needs to address that.” He needs to deal with the teachers’ unions, Murdoch says.
  • Walt: Did you have anything to do with the New York Post’s endorsement of Obama? Murdoch deadpans: “Yeah.”
  • Walt asks about tech policy. Notes the lousy broadband speeds in the states. Murdoch agrees they’re lousy. He says he hopes the telephone companies will pour a lot of money into broadband and unseat the cable companies.
  • How do you look at the device market? asks Kara. How do you look at a company like Apple (AAPL)? I have enormous admiration for Apple, says Murdoch. A wonderful company with beautiful products. But in a corporate sense, it’s slow and limited. Kara circles back, what about devices? Where do you see those headed? Murdoch stresses mobile. It’s a big new thing, he says. It’s huge for MySpace, he says. Mentions that customized mobile alerts would be perfect for the Journal.
  • What’s happening in the economy, how do you feel about it? “I think Congress has just mucked it up,” he says. “The typical family is just being horribly squeezed by taxes, rising food and gas prices. People are cutting back, and pretty soon we’re going to start seeing unemployment.”

    Rupert, Les, Kara, and Walt at D6

  • Walt: So do you think this is a real recession? Yes, says Murdoch, and one that we won’t come out of for some time. There’s a lot to put right, he adds.
  • Kara: How do you imagine News Corp. expanding in the Internet space? We need more organic growth, he says.
  • Q&A: Three years out, who do you see as your major competitors? I don’t know, replies Murdoch. What do you think? Questioner suggests Google and Facebook. Murdoch says that’s possible. What about the Financial Times, asks Walt. No, says Murdoch. The FT will be broken up. Viacom, asks Kara. Murdoch doesn’t seem too concerned.
  • Q: If you woke up tomorrow owning a number of midlevel local newspapers, what would you do? I’d run, quips Murdoch. In short, he says, he’d tell them to write stories people want to read, instead of ones written to win Pulitzer Prizes.

For more coverage, see The Wall Street Journal and Barron’s Tech Trader Daily.

A note about our coverage: This live blog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations expeditiously written and posted to the Web as quickly as we were able. It was not intended as a transcript and should not be interpreted as one.

Rupert Murdoch Session Photos

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