CAMPAIGN INTERNATIONAL: MEDIA GIANTS - Despite his new interests, newspapers are still the big story in Murdoch’s media empire. It may be less ’sexy’ for investors but print remains the bedrock of News Corp Alasdair Reid reports.

People tend to forget that Rupert Murdoch was first and foremost a newspaper man, like his father, Sir Keith, before him. The focus these days is increasingly on the moving image - the 20th Century Fox film studios and his various Fox, Sky and Star television interests around the globe.

People tend to forget that Rupert Murdoch was first and foremost a

newspaper man, like his father, Sir Keith, before him. The focus these

days is increasingly on the moving image - the 20th Century Fox film

studios and his various Fox, Sky and Star television interests around

the globe.



There was no clearer evidence for this than Murdoch’s decision in June

to restructure his interests, spinning off a new division called Fox

Group to hold all of News Corporation’s filmed entertainment, television

programming and distribution interests in the US. A stake of 20 per cent

will be floated on the New York Stock Exchange. News Corp will be left

with newspapers, book publishing and satellite television operations

outside the States.



The reason? News Corp’s share price has been underperforming because

analysts find it hard to assess the value of a multimedia company that

owns old-fashioned ink-on-paper businesses, where long term growth

potential is low, as well as film and TV. The new, sexier division is

expected to be a popular stock.



Murdoch needs to keep Wall Street sweet. The market has entered a period

of merger frenzy and he requires cash to stay in the acquisition game

himself - a high share price will also protect his empire from rival

predators.



There is also the small matter of his forthcoming divorce, which could

put his finances under even greater scrutiny.



When people speculate about possible acquisition targets for News Corp,

they don’t include newspapers on their fantasy shopping lists. In any

case, Murdoch would trigger a monopolies enquiry if he bought any more

in the UK and cross-media ownership restrictions in the US have

traditionally made it impossible to build empires in both TV and

newspapers. He’s already had to sell the New York Post because of

regulations, buying it back again when the laws were slightly

liberalised.



Could there even come a day when Murdoch decides to dump publishing?



Unlikely. When Murdoch began his vigorous expansion into film and TV a

decade ago, it was often pointed out that Wapping kept the whole

strategy afloat. Newspapers remain a solid foundation to his whole

empire.



Despite a rollercoaster ride this decade, his newspapers are still

profitable.



In the 1997 financial year, the UK titles made record combined profits,

up 35 per cent year on year; though recently analysts have been worried

at how expensive it has become to maintain market share.



One way or another, Murdoch is unlikely to forget his roots. If he is

emotional about anything, this is it. Rupert is unwilling to undo his

father’s hard graft. He was studying for his finals when Sir Keith died

in 1952. After a six- month stint as a junior sub-editor on the Express,

young Rupert headed home to save the family business. By the time he

entered Fleet Street with the acquisition of the Sun and the News of the

World in 1969, he had built the largest Australian newspaper group,

launching the country’s first national, the Australian, along the

way.



As a newspaper man, Murdoch will earn his place in history on several

counts: lurid journalism, smashing the print unions to modernise

production, and aggressive cover-price initiatives both in Australia and

the UK. It’s this last issue that continues to earn him the opprobrium

of the chattering classes, especially in Britain. But, as many

commentators have pointed out, the price wars have left him back where

he started, with around 35 per cent of the UK market by circulation, but

minus one title, Today, which closed in 1995.



As his recent skirmish with the German Springer publishing group shows,

he’d do it all again. Perhaps, though, Germany is a sore issue. Much of

the speculation about what Murdoch might buy next centres on the German

TV market. A deal with the Kirch Group has been mooted for months, if

not years. Unfortunately, Germany has not been a happy hunting ground

for him - and it is perhaps ironic that his television ambitions there

could be hampered by perhaps the biggest publishing mistake in his

career.



Following the unification of East and West Germany, he launched Super

Zeitung, a rabble-rousing tabloid that aimed to spread disaffection in

the relatively depressed eastern half of the country. It attracted the

ire of Germany’s political establishment (Chancellor Kohl called it a

’dirty newspaper’) and it was forced to close following a boycott by

advertisers.



The episode did little for Murdoch’s brand equity in the largest

advertising market in Europe.



So there were many reasons for Murdoch to be less than amused by the

emergence of a possible takeover bid by Springer of his arch-rival in

the tabloid sector, the Mirror Group. In June, he hit back, giving an

interview with Der Spiegel in which he promised a ’bloody war’ if

Springer entered the UK market. Springer, it seems, decided it could do

without bloodshed and immediately retreated.



There may be subtle politics at play here (Kirch is a 40 per cent

shareholder in Springer) but no-one should underestimate the importance

that Murdoch still attaches to his traditional stronghold in newspaper

publishing.



NEWS CORP’S PRESS INTERESTS.



In the group’s financial year to June 1998, sales from newspaper

operations totalled dollars 2556 million, representing 20 per cent of

all News Corp sales



AUSTRALIA



National The Australian and the Weekend Australian



New South Wales The Daily Telegraph and the Sunday Telegraph plus 19

suburban Sydney titles in the Cumberland Newspaper Group



Victoria The Herald Sun, the Sunday Herald Sun, the Weekly Times. Plus

30 suburban Melbourne titles in the Leader Newspaper Group



Queensland Minority shareholdings in the Courier Mail, the Sunday Mail,

the Gold Coast Bulletin Group, the Cairns Post Group. Outright ownership

of the North Queensland Newspaper Group (nine titles) and Quest

Community Newspapers (16 titles)



Northern Territory Northern Territory News, Sunday Territorian,

Centralian Advocate, the Suburban Tasmania, the Mercury, the Sunday

Talisman, Tasmanian, Treasure Islander, Derwent Valley Gazette



South Australia The Advertiser, the Sunday Mail. Plus 11 Adelaide titles

in the Messenger Group



Western Australia The Sunday Times



UNITED STATES



The New York Post, the Sunday New York Post



UNITED KINGDOM



The Times, the Sunday Times, the Sun, the News of the World



FIJI



The Fiji Times, Nai Lalakai, Shanti Dut



PAPUA NEW GUINEA



63 per cent stake in the Post Courier



News Corp also has a 50 per cent stake in the New Zealand-based

Independent Newspapers Ltd.



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