Digital non-performance the only blight in Rupert Murdoch's empire
By G Seetharaman ET Bureau|
By G Seetharaman ET Bureau|
Updated: Dec 17, 2017, 01.00 AM IST
Rupert Murdoch's longevity as a media colossus can be attributed to his ability to successfully spread his tentacles from one business to another within the media firmament. He started his career with a newspaper bequeathed to him by his father when he was all of 21, and bought several newspapers and magazines in his native Australia, the United Kingdom and the United States, including The New York Post, the Times of London and The Wall Street Journal.
But he also acquired a movie studio, 20th Century Fox, in the 1980s, which is now home to some of the most lucrative franchises in Hollywood — Avatar, Star Wars and Planet of the Apes; launched Fox News in the US in 1991 and turned it into the top news channel in the country; ventured into television production, which has resulted in immensely popular shows like The Simpsons (which also airs on the Fox network), Homeland and Modern Family; and created a channel, FX, which has come to be known for pathbreaking original content like the award-winning series Louie, The Americans and Fargo.
Besides these, the 86-year-old also built a strong international business, including a bouquet of entertainment and sports channels under the Star India umbrella. He wanted to leave no part of the media business untouched, including book publishing (he owns HarperCollins). "Journalistically, his impact could be pernicious.... But even as he was disdained in certain quarters, he was always carefully watched. Media companies chase Rupert Murdoch as hounds do a fox," wrote Ken Auletta, a staff writer at The New Yorker, in his book Googled: The End of the World as We Know It.
On December 14, the Walt Disney Company agreed to pay $52.4 billion in stock for most of 21st Centuty Fox's (Murdoch's entertainment arm) assets, including its movie and TV studios; cable TV networks, including FX and National Geographic; regional sports networks; and its international business, including Star India and its stakes in Tata Sky and Sky Plc, a European network, among others. Murdoch will keep core assets like Fox News, Fox Broadcasting and Fox Sports. Disney will also assume $13.7 billion of 21st Century Fox's net debt.
While Murdoch did not have a hard time diversifying from newspapers to television and movies, he has not had great luck with making his mark on the growing online landscape. He paid $580 million for the social network MySpace, a precursor to Facebook, in 2005.
But MySpace became more and more irrelevant, while Facebook rose in popularity, and Murdoch finally sold it for just $35 million in 2011. Facebook, on the other hand, is valued at $524 billion. The MySpace debacle was a clear sign of an otherwise canny and prescient operator's failure to gauge the preferences of a younger demographic. In the 1990s and the early 2000s, it was common for media moguls like Murdoch, Sumner Redstone of Viacom and Michael Eisner of Disney to be the target of commentary bemoaning the fact that so few media houses dictated what we read, watched and listened to.
But the same conglomerates now worry about ceding space to tech giants.
Google and Facebook will pull in two-thirds of all digital-advertising spends in the US this year. Netflix, which started as a DVD-rental service but later pioneered video streaming, will spend $8 billion on making and acquiring content in 2017. Its marquee original shows like House of Cards, Stranger Things and The Crown are helping it acquire more subscribers. Amazon, which is Netflix's biggest competitor, is not content with just streaming. It wants to take on the Hollywood studios by distributing more films. Two of the films it co-distributed last year, Manchester by the Sea and The Salesman, bagged three Oscars.
Besides Netflix and Amazon, which are available in around 200 countries, Google, which owns You-Tube, Facebook and even Apple have set their sights on streaming. Murdoch's attempt at streaming, Hulu, which is also owned by Disney, Comcast and Time Warner, has not had the desired success. Hulu, in which Disney will double its stake to 60% after the deal, is available only in the US and Japan. Hulu got a seat at the big boys' table with The Handmaid's Tale, a series which bagged eight Emmy awards this year, but still has a long way to go before it matches Netflix and Amazon. (Disney will pull its movies from Netflix in 2019, when it will launch its own entertainment streaming service, besides a sports variant in 2018.)
"In selling, Mr Murdoch seems to have concluded that Fox was simply not big enough to make the same leap (as tech companies), and that it was better to sell to Disney at a good price," wrote The Economist. The deal also puts to rest speculation about how Murdoch, who married for the fourth time in March 2016, would divvy up his empire among his children. James, his younger son, may land a senior position at Disney, in which the family will own nearly 5% after the deal, and Lachlan will manage the news and sports television business which the Murdochs have retained, along with News Corp, publishing arm. (Elisabeth, one of his four other children and once a strong contender to the throne, is not involved in any of the group companies.)
The publishing arm was spun off from the entertainment division in 2013, two years after Murdoch shut down News of the World, a British tabloid alleged to have hacked the phones of possibly 4,000 people, including a murdered schoolgirl, politicians, celebrities and 2005 London bombing victims. A bigger blow to Murdoch came when his close aide Roger Ailes, who was primarily responsible for making Fox News an influential darling of conservatives, had to resign year following allegations of sexual harassment by women who worked at the channel; Ailes died in May. The channel's top-rated anchor, Bill O'Reilly, was also evicted this year on similar grounds.
Murdoch has never shied away from wearing his conservative ideology on his sleeve and his news brands reflect that. But he makes light of his influence. "Moguls want power, but they want it with a certain order of ritual deniability," wrote media chronicler Michael Wolff in his book Autumn of the Moguls. US President Donald Trump, who is opposed to AT&T's $85 billion merger with Time Fox News' backing, has come out in support of the Disney-Fox deal. The US Department of Justice is reportedly pushing for CNN, owned by Time Warner and a critic of Trump's policies, to be sold for the deal to go through.
Though Murdoch has in some sense returned to where he started from, newspapers are ailing, with both readership and revenues on an irreversible slide. There are examples of newspapers successfully making the transition to digital subscription like The Financial Times, but Murdoch does not have too many brands that online readers will pay for, with The Wall Street Journal being an exception. He still has Fox News, a cash cow, and the sports business, but the era of Murdoch, as we know it, has certainly drawn to a close.
A remarkable run best encapsulated by Wolff in his book: "When you un-demonise Murdoch, when you separate him from his right-wing politics and predatory disposition, you can easily find yourself thinking what fun it must be to have been him. In fact, we admire (secretly admire, anyway) Murdoch because he's created an enterprise that only he would have created."
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