Thursday, 14 July 2011

Is Murdoch Bad for Britain?

The Sun newspaper, owned by Rupert Murdoch's News Corp, famously claimed to be responsible for winning the UK general election of 1992 by running the headline "If Neil Kinnock wins today will the last person to leave Britain please turn out the lights." So British politicians have long been uneasy about News Corp's influence and are patting themselves on the backs for thwarting his plans to buy the 61% of BSkyB that News Corp doesn't already own. There's almost a sense that Britain would quite happily exile the Murdochs to Australia like 19th century criminals. Granted, some of his newspapers have allegedly committed some very distasteful crimes and there are some legitimate concerns about News Corp's influence and power. But is forcing Murdoch to pull his investment from BSkyB, and possibly selling News International (something he strongly denied in the Wall Street Journal today), really in the county's best interest? Is News Corp as evil as it's made out to be?

In the early '90s my first job in media was with The Wall Street Journal Europe (WSJE), published by Dow Jones (DJ). I left DJ in 1996 but I was working for Financial News, a small privately-owned company, when it was sold to Dow Jones in 2007. So by accident I ended up working on the WSJE again, this time as head of circulation sales and marketing. It had changed size and some of the famous dot drawings of people had been replaced by photographs. Circulation had slumped from 100,000 in the late 1990s to less than 80,000, most of which was bulk and copies distributed free to universities. Otherwise Dow Jones was much the same - ultra conservative and with an obsession for journalistic integrity and accuracy. A few months after Financial News was bought by DJ, DJ was itself swallowed by an even bigger fish, News Corp.

It wasn't long before Murdoch brought in some of his own people and the culture of Dow Jones started to change. Where Dow Jones had a tendency to analyze things to death in what we called "Analysis for Paralysis," News Corp just got things done. For example Rupert Murdoch wanted to try selling the US edition of the Wall Street Journal in London, even though the European edition had been sold there for 25 years. We were given just a few weeks to get the printing, distribution and marketing organised but, long story short, we never sold more than a few hundred copies a day, and a couple of years later we gave up. Rupert Murdoch is happy to take a risk and give something a try but if it doesn't work he shrugs and moves on, as he did last month with MySpace.

Murdoch brought in new blood; Robert Thompson, former editor of the Times was appointed as the first ever non-American editor of the WSJ in the US.  Thompson made WSJ less of a dedicated business newspaper and more of a quality general interest paper which went head-to head with the New York Times. As a result it has been the only big newspaper in the US to show circulation increases in recent years. It also brought over some ideas from News International in the UK (not phone hacking, as far as I know), including a wine club, using the strength of the WSJ brand to sell other things. In return The Times learned a few tricks from WSJ about how to manage a pay wall around its website, and introduced one of its own this year. In Europe Patience Wheatcroft a former editor at both the Times and the Sunday Telegraph was hired as editor of WSJE in London in 2009. Despite a redesign and a shift of focus similar to the US edition she was unable to do much to turn round the circulation and she left when she was made a Baroness and given a place in the House of Lords last year.

I haven't met Rupert Murdoch but I did meet DJ CEO Les Hinton, former head of News International, several times and he's an affable leader with a good sense of humour and a quick mind. In one meeting I showed him a graph of a website which had increasing visits but flat page impressions and he speculated that such a traffic pattern was the result of increased search engine marketing. Spot on: this was no dinosaur stuck in the world of print even if he has worked for Murdoch for 52 years.

It was a widely held belief at Dow Jones during the financial crisis of 2008 and 2009 that if it hadn't been owned by News Corp, layoffs at the company would have been much more severe had it still been an independent company. Murdoch hadn't come in to slash costs, he wanted to make WSJ even stronger, and he had deep pockets. But his regime wasn't universally popular with staff. A number of journalists left for competitors such as Thompson Reuters and Bloomberg, voicing criticisms on the way out. Numerous long-term, and in many cases talented, commercial staff were given the push, sometimes unceremoniously.
There seems to be a widely held belief in the media that the companies that form News Corp work closely together and they're all as bad as each other. But my experience was very different. We did merge some of the WSJE circulation and production operations with News International's but I only had one meeting with staff at Sky. There was encouragement to work with other parts of News Corp, but little pressure. In fact we were told to only do so if it made sense for our business unit; Les Hinton said "Don't do it just to be a good corporate citizen."

To my knowledge no-one from News Corp head office in the US visited WSJE in my time there (I left in early 2010 when my position was made redundant), apart from Rupert Murdoch using the offices as a base on one occasion.  Perhaps that laissez-faire approach has been part of the problem, that too much trust has been placed in business units and local managers at the expense of good corporate governance.  Rupert Murdoch flew into London last week to roll his sleeves up and get more involved and it's about time.
Britain would be a poorer place without News Corp, literally, as it employs thousands of people. Rather than push Murdoch to retreat, the government should work with him to clean up the company while limiting its share of media ownership to a reasonable level. Murdoch will hope that his appearance next week in front of the government's select committee will not go the same way as the congressional hearing that Tony Hayward, former CEO of BP, faced in the US which lead to him losing his job. Indeed there are some similarities with the BP situation - a disaster happening a long way away which isn't directly the fault of the man at the top but who may have to carry the can. And if the FBI's investigations in the US find there is substance behind allegations that NOTW also tried to hack the phones of 9/11 victims, he'll be fighting on several fronts. And who knows what other allegations may surface in the coming weeks.

He's not a man to be underestimated in a fight but events may create the perception that he's an old man who has lost his grip on a sprawling media empire and that it's time to step down. James Murdoch (his son and Deputy Chief Operating Officer), Rebekah Brooks (CEO of News International) and Les Hinton also look vulnerable. Will the last one to leave News Corp please turn out the lights.

Update: Rebekah Brooks resigned while this blog was being written and has subsequently been arrested. Les Hinton has resigned from Dow Jones


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