A key driver of News Corp’s current, aggressive Internet acquisition and growth strategy is Murdoch’s personal recognition that his “old media” empire is at serious risk of financial ruin and – worse – becoming irrelevant to a growing percentage of his target audience.
There’s a dramatic revolution taking place in the news business today and it isn’t about TV anchor changes, scandals at storied newspapers or embedded reporters. The future course of the news, including the basic assumptions about how we consume news and information and make decisions in a democratic society are being altered by technology-savvy young people no longer wedded to traditional news outlets or even accessing news in traditional ways.
While it is premature to definitively judge the impact of this revolution on public affairs, political discourse or on journalism itself, the writing is on the wall: the course of how the news will be delivered in the future has already been altered and more changes are undoubtedly on the way. How can we expect anything else, when the average age of a print newspaper reader is 53 and the average age of both broadcast and cable news viewers is about the same? Baby boomers read newspapers one-third less than their parents and the Gen Xers read newspapers another one-third less than the Boomers.
Through Internet portal sites, handheld devices, blogs and instant messaging, we are accessing and processing information in ways that challenge the historic function of the news business and raise fundamental questions about the future of the news field.
Murdoch has clearly recognised that the shift of news consumption among the younger population away from print and towards electronic media is the “thin edge of the wedge”, and that similar moves will start to impact his traditional TV broadcast and cable interests as well. As a response, he is positioning News Corp as the ultimate “online content destination”, which will distribute content from his myriad sports, news and entertainment properties and, in doing so, amass a significant global audience.
The recent US$5 Billion bid for Dow Jones (and its key asset, the Wall Street Journal) is a continuation of that strategy.
Murdoch was recently quoted in Times magazine confirming the changing economics of newspapers:
“You’ve really got to worry,” he says. “Tribune Co.’s revenues [in May] dropped 11% across broadcasting and newspapers. That’s huge. The Times dropped 8.5%. Half of men under 30 aren’t reading print newspapers, and there’s no sign that they come back as they age.”
The commercial pressures to move to digital distribution platforms featured high in his rationale for mounting the bid for Dow Jones. He also justified the purchase to key executives and stakeholders on the basis that he can leverage both the masthead and the content across News Corp’s multiple distribution channels
“We’ll sell our business news and information in print, we’ll sell it to anyone who’s got a cable system, and we’ll sell it on the Web…It almost ensures the price is worth paying.”
But the real clue to Murdoch’s end game – though not just for the Wall Street Journal – lies in the rhetorical question he posed to the Time magazine journalist:
“What if, at the Journal, we spent $100 million a year hiring all the best business journalists in the world? Say 200 of them. And spent some money on establishing the brand but went global – a great, great newspaper with big, iconic names, outstanding writers, reporters, experts. And then you make it free, online only. No printing plants, no paper, no trucks. How long would it take for the advertising to come? It would be successful, it would work and you’d make … a little bit of money. Then again, the Journal and the Times make very little money now.”
It would be an ambitious strategy, but if executed correctly, an immensely successful one.
We’re rapidly moving to a post-platform media world. In 10-15 years, most of the developed world would have access to converged media devices. The notion of changing devices or platforms as you accessed different types of media will be considered quaint at best. There won’t be a device called a ‘television’, or a device called a ‘radio’, or a device called a ‘newspaper’.
In such a world, where digital distribution would literally enable millions of channels to be accessed on these multi-purpose devices, brands will play a key role in determining market share (i.e. audience).
When harried consumers have more choice than they could conceivably handle (even at a cognitive level), they will flock to ‘anchor’ brands – trusted experience custodians. Owning the Wall Street Journal masthead – providing Murdoch can safely navigate its embrace of digital distribution – will provide News Corp with an immense advantage in such an environment, positioning him to capture a large portion of the global audience for trustworthy financial news, opinion and insight.
And where the audience is, advertisers will surely follow.