The thing about Rupert Murdoch is that he loves power more than money – which is why he’s always been more interested in his loss-making newspaper empire and the political leverage it provides than the rest of his vast, money-making entertainment conglomerate. In the Guardian, Michael Wolff comments on the announcement that News International may spin it’s newspapers off into a new company to be controlled by the Murdoch Family Trust.
The print division made a small profit last year. With the closing of the News of the World, one of its big earners, and with the continued fall in newspaper circulation and advertising, those earnings may be expected to disappear almost immediately. That will leave the three big money losers particularly exposed: the New York Post, the London Times, and the Wall Street Journal. The losses among them might be as great as $250m.
It is almost impossible to imagine that a stand-alone public print company would not have to quickly cut costs and dispose of those assets that do not have a credible path to profitability. Indeed, for each of News Corp’s newspapers, protected so long by the company’s vast diversification, being spun off, instead of sold to enthusiastic bidders, might be their worse fate.
And curiously, the papers, while they lose the upside of being part of News Corp, maintain what is arguably the downside: Rupert Murdoch.
Rupert and the Murdoch family trust will still control the papers. Indeed, this odd move, to create a company of ever-weakening businesses, may have been, for Murdoch, a bad choice ”“ but a better choice than selling and losing them.
Meanwhile, it’s awfully good news for Chase Carey and the new entertainment-focused company. Rupert and the other Murdochs will have an ever-deepening quagmire to attend to with the newspapers, keeping the Murdochs at an even greater distance from the entertainment business. Indeed, that is the de facto division that exists now, but the separation becomes cleaner and more widely understood with an actual split.
However, Murdoch will still have a fortune coming in from the entertainment company that he can then use to keep the newspaper company afloat, parlaying cash into more political leverage – and without having to worry about other N.I. executives or shareholders reining his pride in.