Bancroft Family Folds

Murdoch Wins Bid For
Biggest Business
Broadsheet
----------
Remembering
'Rabbi Caught in
Sex-Slavery Ring'
----------
Editorial Page
Vows to Stay
Right Wing

The editorial pages are still the first thing I read in my morning Wall Street Journal. It gives us lesser mortals a portal for viewing the unvarnished id of America's ownership class.

For those of us who follow the drug and biotech industries, it's crucial. Those industries' executives and their think tank toadies have an unfettered pathway onto its pages. Today, for instance, an oncologist who made millions with one successful anti-cancer drug complains that the Food and Drug Administration has gotten too tough on new ones because it didn't give fast-track approval to a traditional chemo agent for prostate cancer -- a drug that couldn't win a single vote from a panel of independent outside experts last week.

Is there actually someone out there who thinks the 76-year-old Rupert Murdoch, creator and owner of Fox News and employer of Roger Ailes, would try to change that outlook? L. Gordon Crovitz, the Dow Jones publisher, assures us this morning that their readers and contributors can count on the paper remaining a bastion of anti-regulatory zealotry:

The nastiest attacks have come from our friends on the political left. They can't decide whose views they hate most -- ours, or Mr. Murdoch's. We're especially amused by those who say Mr. Murdoch might tug us to the political left. Don't count on it.

Contrary to the fears of many journalists in the paper's newsroom, I also don't think you'll see many changes in news coverage. If anything, he'll beef up political coverage in Washington, which, given the Journal's business focus, should increase the amount of news flowing from the nation's woefully undercovered regulatory agencies. That's a good thing.

Murdoch has learned a few things since he briefly owned the Chicago Sun-Times in the mid-1980s, which was his first foray into U.S. publishing. Columnist Mike Royko immediately quit and joined the Tribune, giving that newspaper, with its long history of right-wing conservatism and anti-unionism, an undeserved centrist image.

A few weeks into Murdoch's Sun-Times proprietorship, an ambitious editor inserted a wire story headlined "Rabbi caught in sex-slavery ring" deep inside the paper. Thousands of subscribers in the heavily Jewish north shore suburbs cancelled their subscriptions, starting that once great newspaper's long-term slide into irrelevance. Conrad Black merely finished what Murdoch started.

A few years later, Murdoch bought the struggling New York Post and transformed it into a right-wing rag. But it was a shell of a newspaper at the time, and his willingness to pour money into the project kept tabloid journalism alive in the one city in America that appears to have the stomach for it. I've always liked tabloid journalism myself -- in the 1950s we had two papers come into the house; my dad read the New York Times and my mom read the Daily News. Great sports. Great cheesecake. And Dick Tracy. What else could a young boy want?

But don't look for any tabloid-like transformations at the Journal, or even political meddling. The man is spending $5 billion. This is the journalistic equivalent of buying a trophy wife. Screw around too much with the merchandise and she'll leave you broke and broken-hearted.

He may end up broke anyway. This deal reminds me of the Tribune Co.'s decision to purchase Times-Mirror in 2000 -- also at the peak of a business cycle and at a hefty premium to then already-inflated stock market price. The only ones who made out on the deal were the ones who got out. The Tribune has taken a lot of heat for journalistic mismanagement, but that is merely a proxy complaint for the company's loyalty to the bottom line, which dictates layoffs and shrinkage to cope with declining advertising revenue.

Will Murdoch's Journal be able to escape a similar fate? Today's New York Times leads with a story suggesting that the advertising sales people who work for Murdoch are among the most aggressive in the business. The story had the smell of fear about it. Yet, while a broadsheet newspaper war would be fun to watch, the sad fact is that the two papers are fighting over a shrinking market. Ultimately, no one wins such a battle.

For me, the most interesting business question is whether Murdoch will follow through on his public musing about making the paper's website freely available. Right now, it is the most successful pay news site on the web. I am one of 900,000 people ponying up nearly $100 a year for the right to get web access to Journal coverage. Do the math: that's nearly $100 million. It's making money. Yet Murdoch thinks he can do better by getting "more eyeballs" via free circulation and selling advertising.

I think that would be a big mistake. Advertisers have always placed a higher value on paid circulation over freebies thrown up on peoples' lawns. It shows that readers place a value on the product. Why is the web any different?

The biggest strategic mistake newspapers made a decade ago was giving away their content for free. Now, aggregators like Google and Yahoo reap the advertising revenue by repackaging a product produced by someone else. What's going to happen when newspapers can no longer afford to produce that product? The aggregators will either have to repackage undigested public relations or get into the news business themselves. And, as was always true with freely-circulated papers, the incentives are all toward choosing the p.r. model.

As long as the Journal keeps its website a part of paid circulation, it is living proof that serious news journalism (as distinct from opinion) will survive the transition to the era of internet information distribution. Serious journalists needn't fear Murdoch's politics or his opinions. They should fear his business model.

Posted by gooznews at August 1, 2007 08:42 AM