Reinventing newspapers is Murdoch’s long-range goal
By Richard Siklos

In Rupert Murdoch’s world, two things are certain: the sun never sets on the kingdom, and a television is always on in the background.

On the evening of April 26, several large television monitors adorned the terrace of Murdoch’s mansion in Beverly Hills, California, for a dinner celebrating a special edition of "American Idol" that raised more than $70 million to fight poverty.

Murdoch casually sipped wine and chatted with his daughter, Elisabeth, and other guests, who included Tom Cruise. Murdoch had planned for the event to be an early dinner party, but he finally headed to bed at 1 a.m., leaving Quincy Jones and others chatting on a sofa. After all, he had work to do.

What the partygoers did not know was that during the previous week, on April 17, Murdoch had offered to buy Dow Jones, the publisher of The Wall Street Journal, for $5 billion. So far, he had not heard back directly from the Bancrofts, the family that controls Dow Jones. Signals sent by the Bancrofts’ intermediaries were not encouraging, but he was prepared to fly cross-country and meet with the family on a moment’s notice.

Murdoch’s bid has caused hand-wringing about his intentions for The Journal, a publication that has long led the pack in authoritative business coverage. Perhaps the chief worry among those concerned about the journalistic future of Dow Jones is how much editorial independence the company would have under Murdoch’s rule.

Whatever Murdoch says he may do with such a powerful enterprise, a close look at what he has done in the past - particularly how he has deployed his far larger Hollywood and television properties - is a telling indicator of what life may be like for Dow Jones in a Murdoch regime.

When Murdoch bought the struggling 20th Century Fox studio in 1985, Hollywood viewed him as just the latest arriviste, doomed to be suckered by the industry’s vagaries. Yet Murdoch restored the studio, let his staff there produce the films they wanted (for the most part), and used Fox as a springboard to start his Fox television network and a passel of cable channels and other ventures around the globe.

"Rupert Murdoch is utterly consistent," said Barry Diller, who once ran Fox and now oversees IAC/Interactive. "It’s not like he’s adding toys. This is oxygen to him."

In almost every case, Murdoch endured years of losses to put new offerings like Sky Television in England and the Fox News Channel in the United States on the map.

There is scant evidence of Murdoch’s envelope-pushing imprimatur at the studio that is the center of it all, just as it is less in evidence at the large quality newspapers he owns, including The Times of London and The Australian.

Murdoch’s long-held desire to own The Journal fits into a similar grand plan: to revitalize if not save the original business on which he built his empire: newspapers. His vision is to unite the far-flung news businesses he owns into a seamless digital platform anchored by the Web-oriented Journal and, in the process, reinvent the newspaper industry that his company was built on.

"We are a relatively old company deeply rooted in print journalism," Murdoch told his top news executives in his Australian drawl a few days after the "Idol" party. "Now, we have to make a huge leap into a completely different world."

A couple of days embedded in the Murdoch camp yielded a few clues about what makes Rupert run and why. At the age of 76, he appears to be in his strongest position in years - with his company’s share price up nearly 50 percent in the past two years and his grip over his company finally secure.

Murdoch’s many critics over the years have accused him of a cynical world view that appeals to the lowest common denominator. In sum, they say, he is willing to sacrifice principle for profit.

"His business is privatized, government propaganda - that’s all the company essentially does," says Bruce Page, a journalist who worked at The Sunday Times of London before Murdoch owned it and is among his toughest critics. Page’s 2003 book, "The Murdoch Archipelago," portrayed him as nothing less than a threat to democracy.

"It isn’t that Murdoch’s particularly wicked," he wrote. "He’s not a fearsome, warriorlike figure. He’s Falstaff. He has absolutely no concept of honor."

James Ottaway Jr., whose family owns 6 percent of Dow Jones, sounded a similar, if more measured, alarm in a statement on May 6 opposing the offer.

"When Rupert Murdoch’s news interests conflict, his business interests usually prevail," Ottaway wrote.

This is far from how Murdoch sees himself, although he has acknowledged that "it has been a long career, and I’m not going to say that it hasn’t been punctuated by mistakes."

He also argues that he has evolved as a newspaper owner and does not interfere in coverage or dictate editorial positions at his quality titles.

There are certainly well-worn stories about how he dropped the BBC from his Chinese satellite service to appease the government, published the so-called Hitler Diaries in his Sunday Times, and pummeled opponents in the pages of The New York Post. But his proponents say there are the less-told stories about how he once owned The Village Voice and New York magazine and left their editorial operations largely alone.

Asked what he would tell the Bancrofts if they granted him a meeting, Murdoch said, "I want to tell them how much I appreciate them as a family and to impress on them that my family would be a worthy successor."

Although Murdoch is a huge fan of The Journal’s conservative editorial pages, which are routinely aligned with the political tenor of the Fox News Channel, he insists that most of his editors pick for themselves which candidates they support in elections.

In England, it is not unusual for The Times and The Sunday Times to support different candidates; same for his big tabloids, The Sun and News of the World.

Without his cherished newspapers, Murdoch would be just another billionaire spouting about politics and world affairs and occasionally chairing fund-raisers - not playing as defining a role in shaping public opinion and packaging information. But print is not, at first blush, where the action is in the Murdoch kingdom.

From the sprawling Fox studio lot in Century City and the twinkling lights of the Los Angeles splayed out beneath his terrace, newspapers seem like a quaint and distant quadrant of the empire, contributing just 15 percent of the company’s $21.3 billion in revenue in the nine months that ended on March 31, 2007, and 14 percent of its $3.2 billion in operating income.

Like most newspaper companies, the newspaper group is facing slow revenue growth, and its operating margins are running at a solid, if unspectacular, 14 percent.

Murdoch was back in New York when the Dow Jones news broke, and he went on the Fox News Channel to talk about his offer. While he was in the studio, the Bancrofts issued a statement that family members representing 52 percent of the votes in Dow Jones opposed the offer. Murdoch said that he held out hope - which he says he still maintains - for a meeting with the family.

Three days after his Fox News appearance on May 3, Murdoch still had not received any direct word from the Bancrofts. He sat on a sofa in his office on the eighth floor of News Corp.’s headquarters in Manhattan, behind him a wall of television screens showing his channels, set next to a luminescent blue and yellow map of the world. There is also a rack for his newspapers, flown in daily.

Murdoch said that he believed that some of the 35 Bancroft family members might be swayed to take his offer, and then did something he rarely does: talk about the past. He spoke of his father’s beginnings in Australian newspapers, and how he rescued papers that, he said, would have otherwise disappeared.

"There’s a pattern that goes right up to today," he said, "of providing choice."