Murdoch Returns to His Mass-Market Roots

Rupert Murdoch seems to be quietly nearing a deal to buy Newsday from Sam Zell for about $580 million. That's almost exactly the same amount of money as he spent on buying MySpace - an investment which Gillian Wee weirdly says "has turned News Corp. (NWS) into a toxic stock."

How can a $580 million investment in a profitable company do any visible harm at all to News Corp, a company with revenues of about $30 billion a year? It's unlikely, but it is possible. In the case of Newsday, Murdoch could get dragged through a long and damaging antitrust investigation; in the case of MySpace, he could be the target of Concerned Parents or, worse, stock analysts who start mentally grouping him in with Barry Diller and other moguls desperately trying to remain relevant in the age of the internet.

But in reality both acquisitions look like very good deals for Murdoch. MySpace is already worth many times what Murdoch paid for it, while Newsday, when combined with the New York Post, will help provide economies of scale in the New York region. Those economies will be loaded on the back end, in things like printing and distribution, but they could also come in terms of content: as a commenter on Jeff Bercovici's blog notes, it would make a lot of sense to start running Page Six in Newsday.

Indeed, both MySpace and Newsday play to Murdoch's mass-market strengths, in contrast to the much more high-profile Wall Street Journal. Why is Marcus Brauchli leaving? Maybe, in part, it's because he doesn't have the sole authority he was promised: All Murdoch papers are ultimately run by Murdoch. But I suspect it's more a function of the direction that Murdoch is taking the Journal - very much towards his mass-market comfort zone.

Right now two big headlines at the top of the WSJ.com home page are "Money Edge Could Sway Campaign" and "Loan Losses Pose Threat to Banks." Neither headline would be out of place in the pages of USA Today. They're indicative of Murdoch's broader strategy, which is increasingly coming into focus: to turn the WSJ into a general-interest newspaper with a first-rate business section attached. Its business readers won't desert it because they can't desert it, and it might pick up new readers along the way who until now have read their local broadsheet.

I have to admit that it's not the strategy I thought Murdoch would take. Rather than try to appeal to a broader swathe of Americans, I saw Murdoch concentrating more on taking the WSJ international, appealing to the global business class. But if that ever does happen, it seems it won't happen for a while: International coverage is still something of an afterthought in the WSJ.

Comments

[billddrummer]

The WSJ used to be a must-read for me, not as an investor, but to learn how and what investors and business leaders were thinking about. It seems that the more in-depth pieces will become afterthoughts (question: When did a Murdoch-owned newspaper last win a Pulitzer for reporting?) and the paper will devolve into a business-oriented USA Today. Too bad.