Murdoch Hasn't Given Up on Print or Newspapers

The New York Times - Rupert Murdoch had an office built for him at The Wall Street Journal within days of buying it 14 months ago, and he has made ample use of it — ordering up a wave of changes in the once-staid paper’s content and culture, from the addition of a weekly sports page to general news displacing financial news on the front page to the thinning of its layers of editing.

But Mr. Murdoch, as much old-fashioned press baron as 21st century multimedia mogul, faces a depressing reality: his lifelong fondness for newspapers has become a significant drag on the fortunes of his company, the News Corporation.

The company recently took $8.4 billion in write-downs, including $3 billion on its newspaper unit, which includes The Journal’s publisher, Dow Jones & Company. Meanwhile, the News Corporation’s stock price has fallen by two-thirds in the last year, a sharper decline than at media conglomerate peers like Time Warner and Viacom.

In more vibrant economic times, investors and Wall Street analysts were more willing to look past Mr. Murdoch’s attachment to newspapers — the newspaper segment is now the company’s biggest single source of revenue, about 19 percent in the most recent quarter. But they find that a tougher chore these days, as other media struggle and newspapers suffer through their worst slump since the Depression.

“The thing I hear from investors is that they wish News Corp. was everything but newspapers,” said David C. Joyce, media analyst at Miller Tabak & Company.

“Investors are more forgiving when they are in a better mood,” he said. “The hope for a turnaround in the newspaper business is looking elusive.”

The declining economy and the sinking fortunes of print publications have placed in stark relief Mr. Murdoch’s love of newspapers and his deal to acquire Dow Jones just before the recession set in. Mr. Murdoch, chairman and chief executive of the News Corporation, paid more than $5 billion for an asset that generated about $100 million in operating income last year, a price that now looks like a staggering overpayment. Mr. Murdoch declined to comment for this article.

On the surface, the News Corporation’s Feb. 5 earnings report, for the quarter that ended Dec. 31, appeared to show a nearly $90 million increase in newspaper division revenue from a year earlier. But that was an illusion created by the addition of Dow Jones, which the News Corporation owned for only 18 days of the year-ago period.