09/05/2008
BY COMMON consent Rupert Murdoch is a very smart 77-year-old. Just how smart emerged yesterday when he hit the conference call lines to discuss News Corp’s latest results.
Apart from stage-managed appearances at such venues as BSkyB’s annual meetings, conference calls are normally as good as it gets. This time Murdoch virtually announced the purchase of the Long Island daily Newsday for $580m (£297m). This was slightly odd as New York Daily News owner Mort Zuckerman had offered $650m and Cablevision Systems had at least matched the Murdoch offer.
How come Murdoch was so sure that the deal was done? He has obviously already done a personal deal with the paper’s owner, real estate magnate Sam Zell. But just to be sure, Murdoch sprung the public trap: “I trust Mr Zell absolutely,” said Murdoch, and naturally also said that he considered Sam Zell a man of his word, and added: “We think everything is in hand.”
Tricky now for Zell to extricate himself from that one. Go for the extra $70m — and you declare yourself as a man who breaks his word. Combining the back office and production of Newsday with Murdoch’s loss-making New York Post will save an estimated $100m a year.
TEMPESTUOUS RUSH
But what is this tempestuous rush into US newspapers? Haven’t they just suffered their sharpest drop in advertising revenues in more than 60 years — down 9 per cent in 2007? First the Wall Street Journal. Now Newsday. Counter-cyclical thinking on a grand scale.
There was a clue in Murdoch’s comments as to what is really going on. It was “not factually correct” to see the purchase of the Dow Jones company as a move back into print, the great man said. Pardon? Actually Murdoch is factually correct. Sure the Journal is a newspaper but there are other nice little earners, such as the Dow Jones news wires and the indices arm which compiles the Dow Jones Industrial Average.
Murdoch is convinced Dow Jones is a first-class acquisition, despite the hefty $5.5bn price tag. Similarly, Newsday is not just a newspaper: there are also two New York television stations and Murdoch will be off to law were the Federal Communications Commission to decide he couldn’t hold on to them.
News Corp’s profits jumped to $2.7bn, but included one-off returns of $1.7bn from the sale of a 40 per cent stake in satellite operator DirecTV. The results moved one US institutional investor — Larry Haverty, a fund manager at Gamco Investors in New York — to say in a Bloomberg television interview that “it is clear he [Murdoch] has a terrific group of businesses”.
Haverty added, however: “Hopefully we who invest in it will live long enough to see a point when the market recognises what is going on.” Don’t know about Larry, but you can be sure that Murdoch will.
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