With the announcement that News Corporation will be split in two, employees at the company’s many print papers are facing a new reality: T0hey are now in the newspaper business.
For years, the success of News Corporation’s lucrative cable and entertainment assets formed a buffer between its print properties and the downturn in the newspaper industry. Now, many journalists at those newspapers worry about what will happen as they become part of a much smaller company, grouped with HarperCollins and News Corporation’s education assets.
Even before the split was announced last week, News Corporation was acting to streamline the newspapers and make them more profitable. Its Australian papers, which according to the company’s latest earnings report have had declining advertising revenue, could cut nearly 10 per cent their staffs.
One reporter at The Australian, who asked for anonymity because the subject was delicate internally, said the split “comes at an already traumatic time here, with the whole Australian business being restructured and hundreds and hundreds of jobs being cut.”
The reporter said, “People fear the loss of the security that has come from being underpinned by a vast and profitable entertainment empire.”
At The Wall Street Journal, in which News Corporation has invested extensively in the last five years, a reporter said, “Everybody knows that the reason the paper is having investment put into it is Rupert Murdoch singularly.” The reporter, who spoke on condition of anonymity, said that while that dependence on Murdoch might raise some fears, the effects on the paper on a daily basis seemed too distant to worry about.
“This is so far above any of our pay grades and control,” that reporter said. “There’s a little bit of mentality that we work for a company that is constantly evolving and changing by a family in turmoil.”
News Corp has a deep, widespread presence in newspapers around the world. In the US, that empire ranges from well-known properties like The Wall Street Journal and The New York Post to the smaller Local Media Group, with papers stretching from The Cape Cod Times in Massachusetts to The Record in Stockton, California. In Britain, News Corporation assets include better-known properties like The Times of London and The Sun. Murdoch’s native Australia is home to his largest portfolio: nearly 150 news brands, including The Australian.
Some industry analysts predict the split will have little impact on the daily operations of the newspapers. They say they expect the new company to have no debt, and because of that it should be able to continue to finance investments in its papers.
“This is purely a move to appease Wall Street and better display the value of the parts,” said Richard Greenfield, an analyst with BTIG Research. “I don’t think there’s more or less of a chance of layoffs as two separate companies.”
As part of a smaller company, News Corporation’s newspaper profits and losses will be scrutinised more closely. But the newspapers will be part of a structure that is difficult to compare with other newspaper and publishing companies, said Michael Nathanson, a media analyst with Nomura Securities.
He said, for example, that it will be difficult to compare this new company with the Gannett Company, which owns television stations in addition to newspapers.
“There’s not going to be a lot of peers out there that you can instantly benchmark this to,” Nathanson said.
But with the new company’s structure, investors will be able to see more easily how much money some of the newspapers are losing. Brett Harriss, an analyst with Gabelli & Company, told Bloomberg that he thought The New York Post had lost as much as $110 million a year. A reporter who left The Post in recent years said that, although the paper spends on certain news stories, it does not have the deep coffers of The Wall Street Journal to devote to hiring, or to video reports, and that it relies heavily on freelancers.
For the newspapers, the one constant before and after the split is Murdoch himself, who plans to retain control over both new companies.
“The one friend that newspapers had was Rupert,” said Charlie Beckett, director of Polis, a media research organisation affiliated with the London School of Economics. “Rupert has lost the battle completely in terms of his affection for newspapers, especially in Britain. His love of newspapers, especially British newspapers, has been getting in the way of the share price.”
With the split, the British newspapers may be held more financially accountable. Beckett already pointed to plans to raise the newsstand prices of The Sun and The Sunday Times of London as another small sign “that newspapers are going to have to stand on their own two feet.”
George Brock, a professor and head of journalism at City University London, who left the Times in 2009 after a 27-year career, said that Murdoch “put an enormous amount into modernising it.” He expressed fear now that The Times’s big losses will be so much more noticeable under the new structure that it will be even more likely to be sold.
Charles R Eisendrath, director of the Knight-Wallace Fellows in journalism at the University of Michigan, said Murdoch, despite his love of ink and paper, would not stick with any asset that he did not believe would not benefit him financially.
“He is not going to run them as a charitable enterprise, that’s for sure,” Eisendrath said. “He’s going to run them as a profitable business, and there’s nobody in the world who has shown more aptitude for that or more commitment.”
© 2012 The New York Times News Service
