roundtable: Repost on Concentration of Media
roundtable: Repost on Concentration of Media
Repost on Concentration of Media
W. Curtiss Priest (BMSLIB@mitvma.mit.edu)
Fri, 04 Aug 95 09:10:26 EDT
Message-Id: <9508041312.AA11549@a.cni.org>
Date: Fri, 04 Aug 95 09:10:26 EDT
From: "W. Curtiss Priest" <BMSLIB@mitvma.mit.edu>
Subject: Repost on Concentration of Media
To: Telecommunications Policy Roundtable <ROUNDTABLE@CNI.ORG>
May 12, 1995
CITS Observations on the Following Article
W. Curtiss Priest
The following article is provided from a most informative
magazine -- UPSIDE -- in response to a discussion
held at a Telecommunications Policy Roundtable NE
meeting held at Virtually Wired, Temple Place, Boston, Ma
at 5PM on May 11th, 1995.
With the upcoming house mark-ups on H.R. 1555, one of the
concerns is the lack of language to prevent cross-ownership
of telecom providers and media giants.
The following article provides us with an insight into
how the "game" of "big stakes" competition is played and
an insight into how Murdoch thinks about the world.
Murdoch is, indeed, building an empire. He is playing in
a major league game and the goal is not to provide the
best societal information system, but to win.
Many Republicans think that these two goals can be attained
simultaneously, while many members of TPR-NE have serious
concerns that the game of Media King (or Queen) of the Hill
will undermind societal values.
**************************************************************************
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As provided for under Section 107 of the 1976 Copyright Law, the
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free to do so.
****************************Advertisement********************************
Subscriptions to the UPSIDE may be obtained by callig 619-745-2809,
for $48/year. Complementary subscriptions are available to
qualified recipients.
****************************Advertisement********************************
R U P E R T M U R D O C H
GGLLOOBBAALL MMEEDDIIAA MMOOGGUULL
AS CHAIRMAN AND CEO OF NEWS CORP., RUPERT MURDOCH IS
STEERING THE MEDIA GIANT INTO THE NEW WORLD OF DIGITAL
PUBLISHING AND ENTERTAINMENT. THE AUTRALIAN-BORN NEWS-
PAPER MAGNATE BALANCES A HOST OF DISPARATE INTERESTS-- FROM
TELEVISION NETWORKS TO ON-LINE SERVICES TO DIGITIZED
MAPPING--UNDER THE CORPORATE UMBRELLA OF NEWS CORP. HIS
EFFORTS TO RECONCILE THOSE INTERSTS MAY SET THE STAGE FOR
THE COMPANY'S EMERGENCE AS A LEADER IN ELECTRONIC MEDIA.
by Wendy Goldman Rohm
UPSIDE, February, 1995, pp. 39+
ON A BALMY AUTUMN day in Manhattan,
in a darkened room on the fourth floor of News
Corp.'s midtown offices, something phenomE-
nal is taking place.
Rupert Murdoch is standing still.
Immaculately dressed in a charcoal gray
suit, the News Corp. chief squints into the light
suddenly being shined in his face. A photogra-
pher is altemately muttering to himself and to
his bedraggled assistant.
"I have no time," Murdoch protests, his eyes
twinkling wildly with an
urgency that suggests he's
been sidetracked in the midst
of a fast-paced adventure. It is September 29,
1994, and the Australian-bom media magnate
has recently found himself navigating some of
the most invigorating passageways in his compa-
ny's evolution. Business has always been more
like a white-water rafting competition for
Murdoch--a risk-taker known for guiding his
$11 billion global empire more by intuition than
PHOTOGRAPH [of Murdoch] BY TOM SOBOLIK,BLACKSTAR
by reason. But now more than ever, on many
fronts, he is exploring perilous new terrain.
Running a mammoth company like News
Corp.--with some 26,000 employees scattered
across the globe--is tricky, to say the least.
Competitors--who, with the digital revolution,
now seem to come in all shapes and sizes can
spot it lumbering along from miles away. The
media business as Murdoch has known it over
the past several decades, since the time he
worked as a 12-year-old for his father's Adelaide,
Australia, newspaper, is being
redefined. Vice President
John Evans, a 20-year News
Corp. veteran and former head of Murdoch
Magazines division, has been predicting the
biggest shifts in business since the Industrial
Revolution.
Sixty-three-year-old Murdoch, always ready
for the next challenge, recognized that if there
was ever a time to move fast, it was now. In the
anachronistic image of a gray-suited gentleman
frozen on film on this September after-
noon, Murdoch's colleagues were begin-
ning to see many surprising things.
BoATl NG ON TH E BAY
One Thursday evening in November
1992, 80 News Corp. executives found
themselves in a boat making circles
around San Francisco Bay for five hours.
Aboard were executives from every
News Corp. operation around the globe,
corralled here for an event slyly planned
by Murdoch and Stan Honey, his execu-
tive vice prcsident of technology.
Honey had begun an annual tech-
nology conference for News Corp. exec-
utives to expose them to the ideas and
people who were developing new tech-
nologies that were reshaping the media
industry. He'd decided
that the really good inter-
NEW MEDIA OFFERS OPPORTUNITIES TO TAKE THE
ASSETS OF SUCH NEWS CORP. COMPANlES AS HARPERCOLLlNS
AND PRESENT THEM IN ENTIRELY DIFFERENT WAYS.
actions between people
would happen only off-
line, when the meetings
and presentations were
over. So with Murdoch's blessing, he
chartered a boat.
On the boat were executives such
as Peter Smith, director of technology
for British Sky Broadcasting; Andy
Setos, engineering and operations head
for Fox Broadcasting Co.; and Chris
Holdcn, publishing vice president at
HarperCollins Publishing. Holden
would eventually look back on that
boat trip as the beginning of an era. "It
was not a very big boat, and we all were
forced to confront each other and col-
laborate," he says. "I'd call that the
beginning of everything. We realized
we'd better work together
and share as much info as
we can if we're going to suc-
ceed in this new world."
News Corp.'s Fox and
HarperCollins divisions
could collaborate on content and distri-
bution. Fox's film and television assets
could be used to develop interactive CD
titles as well as books. Likewise,
HarperCollins had relationships with
authors that could translate into new
projects for Fox.
Books, newspapers and magazines
will be around for a long time, but new
media offers opportunities to take the
assets of such News Corp. companies as
HarperCollins and present them in
entirely different ways. Murdoch knew
that the company as a whole would be
missing some strategic chances if he did
not get its operating divisions to under-
stand that their combined resources
could result in big advantages in new
forms of media. The explosion in tech-
nology-based media--like cable, on-line
services, direct broadcast satellite--was
providing the platform for these new
collaborations.
MURDOCH'S EMPIRE
Murdoch's far-flung empire,
spawned by the parent com-
pany News Corp. Ltd., based
in Sydney, Australia, encom-
passes television broadcasting; book,
newspaper and magazinc publishing;
on-line services; data encryption;
motion picture production; direct satel-
lite broadcasting; and more.
In the U.S., the company's TV prop-
ertics include Fox Broadcasting and
eight Fox television stations. In direct
broadcast satellite TV, British Sky
Broadcasting (BSkyB), the largest pay TV
service in the world, and Star TV
together serve all of Europe and East
Asia. And in film, there's Twentieth
Century Fox Film Corp.
Encryption services for the delivery
of BSkyB content and subscriber man-
agement is handled by another News
Corp. division--News DataCom, a pure
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providing data security and encryption
for Murdoch's bold relaunch of Delphi
Internet Services in 1995, which
Murdoch vows to make the number one
on-line service. News DataCom is also
quietly in a pact with two other compa-
nies--Los Angeles-based CommStream
and U.K.-based NTL, that will result in
a settop box that will decompress,
decrypt and provide electronic program
guide services.
News Amenca New Media is a tiny
company with huge profit margins. It
offers 900-number services for other
companies. Its Cinebooks division
licenses historical information about
movies. Microsoft Corp., for one, has a
license with the company for informa-
tion used in its Cinemania CD.
Murdoch's newspaper empire in-
cludes the New York Post and five other
papers in the U.K. In Australia and the
Pacific Basin, there are more than 100
other newspapers. The magazine prop-
erties include TV Guide and Mirabe11a
in the U.S. and dozens of other titles in
the U.K. and Australia. In books, there's
the global presence of HarperCollins.
And Murdoch owns 23 printing presses.
Across this mind-boggling array of
operations, execu-
tives have been
THE VAST RESOURCES OF NEWS CORP. ARE BEING
instructed to think COMBINED TO CREATE NEW AREAS OF BUSINESS, BUT OPERA-
about new kinds of
competitors and
THE VAST RESOURCES OF NEWS CORP. ARE BEING
COMBINED TO CREATE NEW AREAS OF BUSINESS, BUT OPERATION-
TIONS REMAIN FREE TO DO DEALS OUTSIDE THE COMPANY.
new businesses driv-
en by the digital revolution. "We now
have to think of polymedia deals," says
Holden. "When we sit down to strike a
deal, we'll talk movie, on-line, CD-
ROM. At the end of the day, we'll
derive as much revenue from on-line
media as from current traditional
media."
The vast resources of News Corp.
are being combined to create entirely
new areas of business, but, at the same
time, operations remain free to do deals
outside of the company. "The fast-paced
nature of the technology area is at odds
with a centralized technology strategv
for a media giant," explains Honey.
Advanced media activities are now dis-
tributed across the operating divisions.
Susan Katz, vice president of educa-
tion and advanced media at Harper-
Collins, adds, "The idea of who is a
competitor and who isn't is a big chal-
lenge. We're also grappling with figuring
out what can be centralized for cost
effectiveness and what has to be han-
dled at a divisional level."
ICE AGE
John Evans is making tea in the pristine
kitchen of his Martha's Vineyard cot-
tage. At age 57, he is about to become a
father. He is also about to leave two
decades of his life as a News Corp.
senior executive behind. "It's Japanese
twig tea," says the normally irreverent
Welshman, filling his guest's cup. He
sits at the kitchen table. And -
as he talks, Evans squeezes
his eyes shut tightly. His fin-
gertips trace invisible ideo-
grams on the wooden table-
top. There are flowers, and
sunlight pierces the yard. There is his
graceful wife, Yong, a Korean woman
more than 20 years his junior, floating
through the rooms. This is a peaceful,
seemingly commerce-free place--but
for the laptop computer off to one side.
Over a period of 20 years Evans has
presented his visions of the future to
Murdoch. The two first met when
Evans was publisher of the Village
Voice in the 1970s. Over the years at
News Corp., Evans has launched four
newspapers in London and scores of
magazines, including Elle, Premiere,
Mirabe11a and Automobile.
As a child, Evans was fascinated by
glaciers. And he read books with artistic
impressions of the future. He often pic-
tured a 30-foot-high wall of ice coming
down the street, like in the Ice Age,
knocking down streetlights and houses.
Encased in the glacier were all kinds of
frozen mammoths. Recently, Evans
confesses, he came to the conclusion
that the Ice Age occurred quite differ-
ently. He thought about the fact that
most seeds needed 55-degree soil to ger-
minate. Indeed, it fascinated him that
hypothermia in humans set in at 58
degrees. "We're living by the skin of our
teeth!" he thought to himself. The Ice
Age, he decided, arrived one spring
when there was insufficient warmth from
the sun to raise the temperature of
the soil to 55 degrees. Therefore nothing
grew. Seeds didn't germinate. But there
was no ice!
Evans says another such dramatic
change is sneaking up on businesses
around the globe, the first signs of
which are only now becoming apparent.
It is his belief that the media compa-
nies the Time Warners, Bertlesmanns,
Sonys and, yes, News Corp.s of the
world, have not developed technologies
to carry them through the transition.
"In the transition from
the analog to the digital,
we're going to see some
major disruptions," he says.
The media giants are still
operating in a one-to-many
world, whereas the new relationships
with digital media have to be one-to-
one. That's one of the reasons he is leav-
ing News Corp.
Evans has been comfortable playing
the role of oracle at News Corp., but he
is now about to make a major change:
orchestrating the management buyout
of one of Murdoch's companies, News
Electronic Data. This operation, which
is involved in a variety of interactivc
digital efforts, traces its origins back to
the unlikely world of travel publishing.
JAGUAR TAKES OFF
During the 1980s, News Corp. was a
major player in travel publishing.
Unlike the rest of world, the travel busi-
ness had been on-line for a decade,
albeit with dumb terminals. In the late
1980s, the beginnings of a glacial move-
ment started when more and more trav-
el agents began to use personal comput-
ers on the airline reservation networks.
A community of 30,000 travel agents
would go through a transition the rest
of the world would soon have to face. In
light of the changes occurring in the
travel industry, Evans sold Murdoch on
the idea of developing a computerized
service for travel agents, named Jaguar,
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I N L A T E N O V E M B E R O F 1994, NBC decided to
cry foul just when News Corp. had run up a string of
coups and was kicking up some competitive dust.
News Corp. was in the black, having weathered a
near collapse in 1990 when Murdoch had almost
drowned the company in debt. He was grabbing TV sta-
tions away from the big three networks, had wrested
the NFL rights away from CBS (albeit at the hefty price
tag of S1.6 billion), had created a cable studio at Fox
and was exporting more American programming than
any other network.
It was no wonder that the ire
of the major networks was raised:
That rich little underdog, Murdoch,
was stealing away their business
with its brash Fox upstart.
To blunt News Corp., NBC,
itself a subsidiary of Ceneral Electric Co., filed a com-
plaint with the Federal Communications Commission
claiming that Fox Television Stations Inc. was in viola-
tion of U.S. foreign-ownership laws, which limit foreign-
ers to a 25 percent stake in a U.S. television station.
"Had the NBC chairman just noticed that there was an
Aussie amongst us?" quipped a Washington observer.
(Murdoch became a naturalized U.S. citizen around the
time that he began buying the Fox stations in 1985.)
If the world hasn't quite yet become a global vil-
lage, the digital revolution is quickly collapsing the
gaps. In an environment in which Congress and busi-
nesses are pressing for free trade, to what extent do
restrictions on foreign ownership make sense?
Ironically, Fox is producing arguably the most
"American" programming of all of the networks--and
exporting the most programming as well. "The
Simpsons" is the most popular show in South America.
NBC seems to be putting
itself in an awkward postion. The
filing was, after all, inconsistent
with the daily requests of the FCC,
the Commerce Department, the
Clinton administration and the Hill
are getting from U.S. businesses
like Ceneral Electric that are trying to break down barri-
ers in other countries.
Murdoch quickly shot off a letter to FCC Chairman
Reed Hundt, and a veritable army of lawyers descended
on the FCC on both sides. "This thing is not going to be
underlawyered," says a Washington pundit. "It's going
to be like Bleak House." As one insider put it, a "food
fight" is being waged through Hundt's office.--W.G.R.
__________________________________________________________________________
that would provide them with informa-
tion on such things as hotels, resorts
and airlines.
The real work behind Jaguar was to
understand why travel agents had
ceased to be seen as important and to
understand how technology could
empower them to start making more
decisions again. There was a time when
people took very few long-distance vaca-
tions, and when they did it was to only
a handful of destinations. It
was easy for the travel agents
to visit most of the destina-
tions and have firsthand
information about them. But
with the introduction of jet-
liners like the Boeing 707, long-distance
travel took off, the number of destina-
tions became enormous and agents'
knowledge dwindled proportionately.
Evans guessed that Jaguar could again
restore their power by providing them
with easy access to information about
the myriad destinations and ways to get
there
"We got a name for being smart
engineers and what we were really try-
ing to be was psychoengineers, " he says.
"Because we were trying to empower
the disempowered again." Thcse efforts
allowed News Corp. to experiment with
digital technology in a market niche
away from its core competitors. In 1988,
Jaguar was sold for a very
large profit to Reed
International.
About three years ago,
after a stint running five
newspapers for Murdoch in
London, Evans decided to convince his
boss that the time was right to repeat in
the consumer world the work he'd done
in the trade world with Jaguar. Because
of Evans' economic success with Jaguar,
he was given the support to go further,
and from that he created the News
Electronic Data group.
In 1992, Evans convinced Murdoch
to allow him to form News Electronic
Data to extend the work of Jaguar to the
consumer market. "It was to see if I
could extract an essence of what I had
come to believc is at the core of publish-
ing," he says.
A NEW ERA
A whole new business model is rcquired
to approach the world of new media,
Murdoch says. "There is so much to
learn, I use a computer only occasional-
ly--and then very badly." To prcpare for
this new world, Murdoch is in the midst
of orchestrating a companywide vertical
integration of News Corp. assets that
would result in interactive versions of
the company's media products madc
available via News Corp.'s Delphi
Intemet Services, as well as other distri-
bution channels. Nineteen ninety-five
is the year Murdoch will seek to
strengthen his grasp over digital distri-
bution and content through his technol-
ogy assets around the globe as well as
new ventures. He saw his advantage
over other would-be new media stars as
his arsenal of "branded" content.
Although some are skeptical about
Murdoch's grand plans such as vowing
to turn Delphi Intemet Services into the
number one on-line service, even
though it currently is in fifth place--
others point out that his high-stakes
gambles have usually paid off. Among
his high-profile coups: a successful
fourth television network, a Fox NFL
contract grabbed away from CBS and
some pioneering accomplishments in
direct broadcast satellite technology.
What drives Murdoch to distraction
about the digital stampede is the
amount of re-education involved. "I
wish I was a scientist or a physicist," he
says. "There's so much to know. The
biggest challenge is getting educated."
That's why technology gurus Greg
Clark, president of the News Corp.
Technology Group, and Honey are lead-
ing the way, acting as the high-tech
conduits for new business opportunities
between the far-flung News Corp. divi-
sions. News Corp.'s 20th Century Fox
and Fox Broadcasting now funnel their
high-tech aspirations into Fox Inter-
active, which was established last May.
Ted Hoff, president of Fox
Interactive, says that inter-
active versions of Fox pro-
gramming and films is "no
longer done as an after-
thought." With this fall's
"The Pagemaster," Fox intends to
release a video game version on the
same day the film is released. "With
digital media, we're all going to the
horse race and putting $2 on every
horse," says Hoff. "Under Rupert's
counsel, the charge of the studio is to
take the assets of News Corp. and build
and develop properties that extend the
value of that asset." Murdoch is also
tightening his grip on Fox brands. In the
past, Fox licensed out its properties,
such as "The Simpsons," to software
game developers. "That was a mistake,"
Hoff says. "We lost a lot in the interpre-
tation of that content."
Hoff sees the market for video game
cartridges dropping off, however, and
predicts that the next 18 months will be
a "trough" during which personal com-
puters will be hot before the arrival of
settop boxes. Fox has been
slow diverting its efforts
away from the cartridge game
business--for such propri-
etary platforms as Sega and
Nintendo and focusing on
CD-ROM-based edutainment releases.
"By mid 1995, there will be an extraordi-
narily strong retail market for PC-based
educational and entertainment versions
of Fox content," says Hoff.
At Box Sports, Murdoch's technolo-
gists are working with Fox Sports chief
David Hill to develop real-time broad-
casting of sports information. Opti-
mistic colleagues of Hill predict that the
result will be nothing short of the "rev-
olutionizing of sports reporting."
In London, the heart of Murdoch's
print empire, News Corp. becomes
News International parent company of
several London newspapers. The News
International New Media division has
been spun off from the group to focus
on on-line and digital versions of these
print assets running on Delphi. While
many analysts still laugh at the thought
that anyone should be concemed about
the competitive impact of Delphi
Internet Services, in some ways that on-
line property is the strategic glue that
will result in new media projects for vir-
tually every division of the company.
What's more, there was the under-
standing that, like the traditional media
business, in the new media world brand
recognition was everything. Honey had
gone to Murdoch with a plea: Com-
peting on-line providers, such as Ameri-
ca Online, CompuServe, Prodigy and
others, "will take a branded look and
feel and layer it on top of our stuff and
then try to take over that customer rela-
tionship." It was for that reason that
Murdoch agreed with the recommenda-
tions of Honey and Evans that he
acquire Delphi, back in October 1993.
In the world of interactive media,
News Corp. executives believe that
fixed media--CD-ROMs, cartridges,
disk-based devices--are an interim step
to a completely on-line world. "Internet,
Delphi and TV as it becomes interac-
tive, all will become very much inte-
grated, " HarperCollins' Holden predicts.
Delphi, the 150-person company
currently based in Cambridge, Mass.,
has been in the process of moving its
executive offices to New York. Unlike
other on-line services, Delphi has pro-
vided access to the Internct, but its
weakness has been its lack of a graphi-
cal interface.
Last fall, Delphi did an about-face in
its plans for a graphical user interface for
the service, deciding to use Internet-
compliant software modules, like
Mosaic, instead of devising completely
new technology. In this way, Murdoch
hopes to leapfrog the competition and
gain instant access to the roughly 30
million potential customers that cur-
rently use the Internet. (All the major
on-line providers are scurrying to be part
of the Intenet as well. Data encryption
technology provided by News Data-
Com, another News Corp. company,
will make Delphi a secure place to do
business--a concern that has plagued
the Intemct, where hackers are known
to roam freely.
News Corp. anticipates that rev-
enues from on-line games based on
newspaper data may eventually equal
on-line advertising and subscription
earnings. Delphi UK was recently
launched and this fall plans to offer
financial betting games based on the
stock market--a popular item in
London, where gambling laws are more
relaxed than in the U.S. Murdoch has
traditionally used newspaper-based lot-
tery games to win the circulation wars
in London. The cyberspace versions will
soon appear, with advertisers sponsoring
the on-line games.
Back in the U.S., HarperCollins'
New Media division is fed advanced
media project ideas from technologist
Honey on a regular basis, according to
Katz. "Because of Murdoch, there's been
lots of change," she says. "In the past 18
months, things have popped." Within
the company, HarperCollins' advanced
media specialists from the college, adult
trade and children's book divisions meet
every other month to share their respec-
tive plans for Delphi. In the past year,
the New Media division has tripled the
number of developers it is working with
and the staff has doubled, says Katz. "In
the education market and in the refer-
ence market, new media will have a
very dramatic impact on book sales."
In other areas, TV Guide is creating
new value for the company through TV
Guide Online and TV Guide On-
screen--a joint venture of TCI and
NewsCorp. TV Guide OnScreen, accord-
ing to Larry Miller, vice president of
marketing,, is the first fully digital chan-
nel and a precursor to digital television.
Using MPEG 1.5 compression, images
are transmitted digitally, and cable pro-
gramming can be updated for cable oper-
ators almost immediately. (Historically,
programming information relied on
physical distribution, via laser disk.~
Honey chimes in, "I've been amazed at
how fearless [Murdoch] is about tech-
nology. " He realizes that the client/serv-
er model "is the parallel to the publish-
ing world in the digital arena."
CHALLENGES AHEAD
Murdoch is catching on fast, surprising
his technologists. But the man who
seemed to delight in keeping his com-
petitors guessing is also making analysts
nervous. Murdoch is clearly back on the
acquisition trail. And anything that
resembles the News Corp. chief's old
habits of heaping up debt for the compa-
ny has made Wall Street skittish.
But, as was typical, Murdoch's
vision was further out. His December
1993 acquistion of the NFL broadcast
rights for four seasons, as well as the
1997 Super Bowl, meant bringing mil-
lions of viewers to Fox. It remains to be
seen whether that enormous invest-
ment will be worth it, or whether it will
turn out to be an error in judgment,
more reflective of the News Corp.
chief's personal delight in making his
competitors squirm.
Murdoch approaches business as if
it's a sport and gets the greatest thrill in
coming from behind and sprinting ahead
of the leaders. Says a senior News Corp.
executive, "Rupert is not interested in
monopoly. He'd have no fun. How do
you keep score if there's only one team
on the court?"
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support them.
***************************End Advertisement**************************
ogy front, Murdoch's acquisition of soft-
ware developer Kesmai Corp., Char-
lottesville, Va., should pay off. That
company's technology for multiplayer
games will soon be making a splash on
Delphi Internet Senices.
Murdoch's rationale for the 1989
purchase of Etak Inc., the Menlo Park,
Calif., company that was cofounded by
Honey, was also proving to be sound.
Etak developed mapping and navigation
software, and had been brought to
Murdoch's attention by futurologist
Evans during his work on
Jaguar. Evans had been
doing a survey of where
he could get map data
when he came upon Etak
and convinced Murdoch
that digital navigation and map data
would be key to adding value for
numerous content providers in the con-
sumer market. Etak had up to that time
focused on commercial systems, such
as those for dispatching ambulances and
fire trucks.
Evans' predictions are now coming
true. Etak's mapping technology has
been licensed to Sony Corp. for its
recently introduced consumer vehicle
navigation system, and car manufactur-
ers are using it in their own consumer
navigation systems. The acquisition of
Etak was fueled by Murdoch's vision of
the long-term prospects in the con-
sumer business.
For the most part, News Corp. is
able to move more quickly than other
media giants--with the exception of
Tele-Communications Inc., Englewood,
FOR THE MOST PART, NEWS CORP. IS ABLE TO MORE
MORE QUICKLY THAN OTHER MEDIA GlANT BECAUSE IT IS
CONTROLLED BY A SINGLE INDIVIDUAL.
Colo.--because it is controlled by a sin-
gle individual. Unlike the Time
Warners and Sonys of the world, News
Corp. has no giant upper management.
News Corp. insiders recognize that it is
Murdoch's control of the company that
enables it to move as quickly and
aggressively as such companies as
Microsoft and TCI--driven by power
fiends Bill Gates and John Malone,
respectively. Ironically, the single-hand-
edness and single-mindedness of
Murdoch is also a source of trouble for
the company. What would happen to
the organization without Murdoch's
appointed rounds: his 10-day stints
cvery three months at every division;
his annoying phone calls to scores of
offices around the globe?
Wall Street worried about that as
well. Says one senior executive, "If
Murdoch is taken away, everything still
runs well. What is lost is the deal-doing
and the next step. " Within the Murdoch
empire, there is no obvious heir appar-
ent. That's because senior executives
often don't stay at the top very long, due
to a phenomenon known to high-level
insiders as the Icarus Syndrome: Those
[TABLE]
NEW MEDIA
Technology Companies:
Delphi Internet Services
Etak Inc.
Fox Interactive
HarperCollins New Media
Kesmai Corp.
News Elecrtronic Data
TV Guide Online
TV Guide Onscreen
ENTERTAINMENT
Film & Television:
Fox Broadcasting Co.
Fox Television Stations
FX (cable)
SF Broadcasting
Twentieth Century Fox
Twentieth Television
International Satellite:
British Sky Broadcasting
Star Television (Asia)
PUBLISHING
Book & Magazine Publishing:
HarperCollins Publishers
Mirabella
The Times Literary Supplement
TV Guide
Newspapers:
New York Post
News of the World (UK)
The Sun (UK)
The Sunday Times (UK)
The Times (UK)
Today (UK)who get too close to Murdoch get
burned. Those who do get drawn into
working closely with Murdoch for a
period of time discover that "their mar-
riage goes to hell, and their families, and
their health, because it's almost impos-
sible to keep up with his schedule," says
a senior executivc. (Former Fox chief
Barry Diller is but one example of an
executive who was too powerful to
coexist with Murdoch.]
With his 32.6 percent share in the
company, Murdoch is well supported by
the board. Despite his reputation for
keeping the power to himself, he was
also surprisingly well liked by senior
and middle management. Nevertheless,
says a senior News Corp. executive who
asked to remain unamed, "If I wanted
to wield power I would understand that
restricting people from infor-
mation is the best way to do
that. Rupert never lets one
person run anything because
[that person] would under-
stand it much better than he
does, and that's not the way you can run
an autocracy."
There are very few company veter-
ans who are viewed to be in a position
to succeed him. Among those few is
Sam Chisholm, the tough-talking 54-
year-old director of News Corp. Ltd. and
director of Star Television. According to
insiders, however, Murdoch is grooming
his own children to take over his
empire. Son Lachlan, just graduated from
Princeton, currently runs his
Australian newspaper operations.
Daughter Elizabeth, who has worked in
a number of capacities at Fox, currently
owns two television stations in
California (not owned by News Corp.).
Both are highly respected and well liked
throughout the company. His wife,
Anna, who serves on the board, also
knows the business inside out and is
well suited to take on the job as an
interim measure, say company insiders.
Last fall, Murdoch smoothed the way
for his children to take control of the
empire by buying out the interests of his
extended family. The arrangement
allows his four children to eventually
have 100 percent of Cruden Invest-
ments, the private firm that owns 32
percent of News Corp.
As Murdoch prepares for the transi-
tion to the future, and tenaciously pur-
sues new opportunities, he also is dem-
onstrating a surprising ability to let go.
He has given the nod to a managcmcnt
buyout of News Electronic Data (NED),
being led by Evans. According to Evans'
colleagues, Murdoch is allowing Evans
to buy out that promising company in
appreciation of his 20 years of guidance
at News Corp.
Evans' colleagues say that being part
of a gargantuan organization like News
Corp. was slowing the NED founder
down, despite his impressive track
record of shoving the company into suc-
cessful new business ventures. Those
close to Murdoch suspect that he will
still remain close to Evans, and both
will support each other's efforts.
Nevertheless, Evans is not shy about
acting on his beliefs that new
media will require even more
dramatic changes in how
media companies traditional-
ly think about relationships
with their audience.
"Murdoch still has a one-to-many view
of the world. The glacier has moved,
however. Things have changed because
of technology more than anyone imag-
ines," he says.
At the same time, Evans recognizes
the benefits of Murdoch's almighty con-
trol of the company: "They say in Korea
that fish rot from the head down. So
they obviously must prosper from the
head down, too."
Amid his nonstop adventures,
Murdoch knows that, regardless of the
twists and tums the infobahn may take,
in the end the core of his business
remains the same. The new media busi-
ness still involves all the elements of
the traditional business: money from
advertising, subscriptions and transac-
tions. "The printing presses change,"
Honey says. "But there are a lot of ways
that guys like Rupert Murdoch under-
stand it."
Wendy Goldman Rohm is a contnbut-
ing writer to UPSIDE and editor at large
for Interactive Week. She also writes for
for Wired, the Chicago Tribune and the
Boston Globe. Rohm, who lives in
Evanston, Ill., welcomes contact via
phone at (708) 869-3140 or via e-mail at
73423.621@compuserve.com.
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