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Is Rupert Murdoch Losing His Magic Touch?

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Two years ago, Rupert Murdoch bestrode the media world like a colossus. News Corp.’s (s nws) stock simmered above $25 a share as properties from MySpace to American Idol to Fox Sports stood tall. A business news channel was in the works, and Murdoch was gunning for Dow Jones as the jewel in his media crown. Today, if you listen closely, you can hear the air leaking out.

It’s not just the Great Recession (to use the name currently in vogue). Ever since the purchase of Dow Jones, signs of fatigue and weakness have been appearing in nearly every area of Murdoch’s empire. News Corp.’s share price has fallen 77 percent from its 2007 high to $6 Friday, compared to a 56 percent fall in the S&P 500.

That’s not to say Dow Jones was a bad move. (Although it was a mightily overpriced one; News Corp.’s $14 billion market cap is only two and a half times the $5.6 billion it paid for Dow Jones.) Dow Jones has given News Corp. a strong foothold in online news. Its sites’ traffic grew 76 percent last year, and while the Wall Street Journal’s page views are significantly smaller than the New York Times’, its growth is twice as fast.

So why did operating income at News Corp.’s newspaper division fall 9 percent last quarter? Because other newspapers it owns aren’t being as spry as the Journal and its sister sites about driving traffic. Many are clinging desperately to print formats. As has been said over and over, it’s not the news(paper) business that’s dying, it’s the print platform.

Operating income is falling faster in other divisions: down 93 percent in television last quarter, 84 percent in satellite and 72 percent in film (Fox studios had only two of the top 20 grossing movies last year). New technologies are undermining these and other areas of its empire. Why bother with cable or satellite TV when you can get the many best programs online? Many are canceling their pay TV subscriptions to save precious dollars. Others who keep watching are using TiVo (s TIVO) or other personal video recorders that let them skip channels commercials.

But News Corp. isn’t showing signs it can capitalize on digital media. Many MySpace pages, once lovingly nurtured, have gone to seed, and the site’s revenue was down 3 percent to $226 million, while operating income fell 85 percent to $7 million. The move by Hulu, of which News Corp. owns 45 percent, to box out Boxee is not only unpopular, it’s becoming a PR black eye. These challenges could grow more daunting as Peter Chernin, the executive with a reputation for really understanding digital media and issues like digital-rights, heads for the exits.

That leaves News Corp. with a sprawling empire of businesses struggling to keep up with a fast-changing world. And it leaves Murdoch looking like an old media baron — which he may have been all along.

Photo via Flickr courtesy of Oxfam America

4 Responses to “Is Rupert Murdoch Losing His Magic Touch?”

  1. Rurpert has his own times at past and present time no longer belong to him,I disagree he losing his touch because people move from print media to effective and cheap online media.I think it just all about crisis hit so many people.I believe People are actually love “print media.but since less money they can get from the place they work ,it is time for efficiency without losing grip of “news update”.I think Rupert will reborn soon when the Crisis is gone,but I think with only better advertising does ,this newborn “will be celebrate by All people in the world

  2. Rupert believed his own BS basically.

    Just another CEO sucked in to continuously padding out the company growth to please the stock market and he took his eye off the ball while doing it.

    Because he had a seemingly unlimited credit line he invested heavily in new print infrastructure just as it was becoming obvious the net would soon make it all obselete. You’d have to look at his books to find the figure invested in newsprint plant in the last tow decades but it is a mountain of debt to service. He painted himself into a corner, with print becoming redundant, the new printing plants can now only be written off and maybe sold for land value.

    And there’s more to cable subscription dying than bit torrent and the economy. His ‘package’ deals have become so loaded and the programming such repeated rubbish it’s obvious that business has been dying for years. Funnily enough consumers don’t like being forced to pay for sh*t they don’t want. What sort of business model spends cubic millions advertising for new subscribers but harrasses it’s long term customers to the point they disconnect?

    Rurpert has idiots running his companies!