1:51 pm Jun. 29, 2012
The Lineup collects the media stories, big and small, that are on our radar each day.
Today's Wall Street Journal has a great big story that's been getting lots of attention: A tick-tock narrative of Murdoch's decision to split News Corp. into two separate publicly traded companies.
You should read it because it's full of great details and little news breaks. Then come back here for a fun exercise: What happens at a newspaper where the big story of the moment is your own boss? It's a conundrum lots of us who have worked the media or business desk are familiar with. It feels like a test.
The deal, announced earlier this week, would put the Journal itself under new leadership, along with newspaper properties like The Times of London, the New York Post and dozens of others around the world, as well as the book-publishing imprint HarperCollins.
It's a move shareholders have long wanted, but which for a long time Murdoch has been said to have been resisting. He confirms it to the Journal in an on-the-record interview.
"I was hanging on, and so was the whole family," Murdoch told the Journal reporters in an interview yesterday, according to the article. "We were very emotional about it .... I went through lots of ups and downs."
From a journalistic perspective, the Journal must be mortified every time another news outlet beats them to breaks about Murdoch and the opaque inside workings of their own company. Their publisher and direct boss Robert Thomson is so far one of only a couple of names being seriously bandied about as a potential chief executive for the new media company Murdoch plans to form.
But on the other hand, when news outlets report on their bosses they must battle the perception that something has been sacrificed in exchange for the access they have the advantage in getting. There aren't really any other circumstances in journalism in which reporters are encouraged by "good journalism" gurus to report vigorously on a person or entity that cuts them checks every other week, except for reporting on your own paper.
One way this piece gets around the problem, almost but not quite completely, is by executing it as a "Rupert Murdoch speaks" story. It's certainly newsworthy to carry information that comes directly from the board chair and chief executive of a company that is considering splitting up.
The challenge here is almost that Murdoch and other sources appear to have been able to give them so much that "Rupert Speaks" is an undersell. In fact, what the Journal very likely has here is the definitive account of what actually happened. It's just missing any named sources besides Murdoch himself. It's certainly possible that there just isn't anyone around who is in a position to contradict him. After all, much of what he's talking about is how he came to the conclusion that splitting up his company was his best move.
The value of the interview isn't to be underestimated. (And, yes, Murdoch's been making the rounds on television, and spitting out bits of news everywhere. I can guarantee this interview was a special one to him, though.) The interview is the reason the piece is studded with information that puts widespread speculation, especially in the British press, to rest. For instance, no longer will reporters at other outlets have to say that "sources close to the situation" believe Murdoch "long resisted" a split-up: He's now told the Journal that himself.
There are "sources," too:
"He wrestled with it for much of the spring, people familiar with the situation said," an almost unnecessary addition of anonymous sourcing since Murdoch has already said it himself, though it adds a timeframe.
The Journal reports that Murdoch went to his ranch in Carmel, Calif. last month for "a 10-day break and thought things over ... Mr. Murdoch invited several News Corp. executives to his house, where they discussed business, including the split idea."
But another thing Murdoch does in this interview, beyond telling his story, is to pump up the value of The Wall Street Journal itself.
"In particular, with the inclusion of The Wall Street Journal, acquired in 2007 along with other Dow Jones & Co. assets, executives realized the publishing company had a global brand that could allow it to stand alone," reads one line in the report.
And so we have a report in the Journal from their boss that says the success of the Journal is what helped make up his mind to split it off into a separate company.
The problem there is that the likelihood the publishing company can survive and be profitable enough to satisfy its own batch of shareholders is the big question-mark in the News Corp. crack-up.
The piece attempts to deal with this directly:
"To ease concerns that the publishing company is seen as the unwanted stepchild, executives decided it would have a strong balance sheet, with no debt."
But that was only ever part of the question. The Times, the New York Post and The Australian are all money-losers. Can he possibly make a new publishing company with enough of a profit margin to satisfy even its own, new group of shareholders?
Murdoch also repeats a claim here that the split-up decision was not at all prompted by the phone-hacking scandal in Britain.
"Mr. Murdoch said the scandal, which he has described in the past as a 'major black eye' on the company, had 'absolutely nothing' to do with the decision to split off the publishing operations," the paper reports.
This seems pretty implausible. And it's immediately followed with the counterpoint: "But people close to the company say it has been impossible to ignore the negative effect of the U.K. tabloid scandal on the rest of the company."
The effects will continue to be felt. It was News Corp.'s involvement in the corrupt British newspaper business that likely resulted in their being declared "unfit" to run a media company by British parliament. This coming month, before the Olympics, a government regulatory agency is set to make a decision about whether Murdoch's News Corp. is "fit" to own the shares it already has in BSkyB, the British satellite broadcasting company which News Corp. shareholders would have hoped they would own completely by now.
There is one more place in which the piece brings up what's been a point of contention, according to previously published reports: "The Murdoch discount." This is the notion that shareholders are tolerant of losses incurred by the passions of Murdoch himself, including newspapers, because he's still the best guy to run all the rest of the stuff in the company.
Shareholders, by all accounts, were starting to find the discount steep. Did Murdoch have this issue in mind when he consented to the split-up?
"I don't give a ---- about that," Murdoch told the Journal.
So, overall, the Journal scores pretty well today on the Murdoch beat. But let's not forget that the split-up news has been a good story for Murdoch so far. Shares in News Corp. got a boost from the announcement, for instance. Shareholders are happy, it seems. If there is any bad news, it's going to come out of the publishing side. Controversial decisions, infighting at the top, low share prices, terrible forecasts for the business when the numbers are all crunched.
And that's why this isn't the real test of the Journal's doggedness on the Murdoch beat. When the paper beats the Times or Financial Times to some bad news coming out of this deal (and there is sure to be something), we'll know for sure how serious they are.
Prediction: That story, when it comes, will not have Murdoch on the record.
For an unscientific measure of how enthusiastically the Journal has embraced the story of its owners, enjoy the below screenshot of the Journal's "MEDIA AND MARKETING" vertical page from their website, taken this morning (hat tip to Amy Chozick). Red arrows indicate where they are covering their own company.
In other news...
Here's a good summary of all the news Rupert Murdoch made yesterday regarding the News Corp. split. [The Huffington Post]
Fox News is "in denial" about its botching of yesterday's health care ruling, writes Dylan Byers. [Politico]
Savannah Guthrie has officially been named co-host of "Today." [The Hollywood Reporter]
Richard Beckman has reportedly been pushed out of Prometheus Globa Media. [W.W.D.]
Curiosity is swirling about Advance Publications' intentions for its Jersey papers. [Poynter]
Greg Kelly is leaving "Good Day New York" and moving to Fox 5's evening newscasts. [TV Spy]
The New York Post is "pleased" to "clarify" that it lifted Dylan McDermott quotes from another newspaper without credit. [New York Post]