Murdoch provides a lesson in tough times
Rupert Murdoch not only attended his mother’s 100th birthday party on Sunday 8 February, he this year celebrated 25 years since launching Sky television, 40 years since buying the News of the World and will clock up 40 years of owning The Sun later in 2009. If anyone can survive a recession it surely is him.
Murdoch celebrates his own 78th birthday in March and, given his father was running his Australian press empire while young Rupert grew up, he has studied the media business first hand for three-quarters of a century.
He doesn’t always get it right. Less than two years his News Corporation paid $5.7bn for Dow Jones, the Wall Street Journal publisher, and already half that cost has been written off. The latest results include $8.4bn of write-downs.
Yet Murdoch is canny. Competitors such as the Chicago Tribune have gone bust and others are cutting back dramatically but for Murdoch, the elimination of competition is an opportunity.
He almost went bust in 1990 after launching Sky – asking Britons to pay for a product they could already receive free from BBC and ITV. But the rival British Satellite Broadcasting – the squarial company – was going bust even faster. Murdoch’s coup was not to wait until BSB went out of business but to merge with it on equal terms: Sky gave away half the company because Murdoch could see that half a healthy business was worth more than all of a stricken one.
BSB was an impetuous company seeking instant success; Murdoch had the foresight to see multi-channel broadcasting was a long-term winner and rescued his rival to achieve his own goal. That there was a UK recession at the time was a short-term matter.
News Corporation is now a global empire and there is a global recession. Geographical diversification has provided no spread of risk. Advertising revenues have plunged cutting the share price by two-thirds in a year. Yet despite his dynasty breaking all the corporate governance rules with its nepotistic appointments and pyramid of quoted companies, I’d bet on it being a winner from the recession.
(And in case you’re wondering, I’ve occasionally written for his papers in the past but never worked for him and have no reason to sing his praises other than that he reads the market in a way most other publishing groups fail.)
In times like this, businessmen with less history than Murdoch need a model and an inspiration. The aging Aussie is just that. Be brave, be bold and still be there when the good times return.
