News Corp (NWS) becomes the first major media congolomerate to acknowledge that the recession/slowdown is hitting the ad market.
Speaking at a Bear Stearns conference, News Corp. CEO Rupert Murdoch said he’s become “a lot more pessimistic aobut the economy,” and that Fox’s local TV markets are seeing ads running 5% behind expectations:
“We’re doing very well indeed in New York, and very well in some markets like Atlanta and Orlando, and in other places it’s softer. And net net, overall, on our local stations, let’s say our revenue is about 5% behind what we had hoped for. But when we put that against all the new things we’re starting and doing, and all the growth drivers we have, we’re in great shape.”
Rupert stressed that other businesses were going great guns, and that the company wasn’t ratcheting back overall guidance. But after months of “no recession here” comments from Murdoch and his media mogul peers, even this admission is significant. We’ll provide a full transcript of his comments as soon as we can.
On the WSJ and newspapers in general, and how the Web will affect them: Wall Street Journal is simply a brand and a window into what we do. Dow Jones is what we bought. Big opportunity. May be in for a temporary downturn, for a year or so. But overall there’s a big boom, especially in markets like China and India, and that’s what we’re going to take advantage of.
Back to WSJ: How do you turn the WSJ.com into a big profit centre? It may be fairly big, but it won’t be as big Fox News or other things. Or maybe the Wall Street Journal itself [did we get that right?]. We are a software company and we are neutral about whatever platform it appears on.
MySpace: Is growth topped out? Will ad targeting really boost CPM in a meaningful way? Yes (to targeting).
But it’s harder to monetise many of MySpace’s billions of page views, isn’t it? We try to find people with common interests, and commercial interests, for that matter. Those people do tend to turn a lot of pages pretty fast. It’s harder to get in front of them. As opposed to Yahoo or MSN, where you’re more likely to go to one page, or two pages. People at Myspace come for a couple of hours, and look at hundreds of pages. So there’s something to what you said. But last month we had 40M people in the U.S. logging in, and 20M people uploaded a photograph. So there’s huge opportunity.
What about Yahoo/NWS deal? It’d be fun to beat Microsoft. (Laughs) No, we’re not going to get into a fight with Microsoft. You’ve got two giants. Microsoft and Google. Google has invented, and keep reinveinting a great search engine. Dominant. Never promoted it. Just word of mouth, keeps growing. Yahoo missed out. Bought Overture and never did anything with it. Now they’re down to low 20s of market, and MSN has has only 10% of market. It’ll be a lot of fun to watch.
We’re very happy to be in the Google camp. They sell our search advertising, and pay us well for it.
So what about a MySpace/NWS deal? I think some deal with one of them would have been nice, but it’s probably not possible.
Fox Biz Channel: Total confidence in Roger Ailes. Putting out a good looking product now. What we have to do is get distribution. At the moment we’re happy with what we’re doing, it’s costing us less than we expected. We’re at about 35M homes, have to get to about 60M homes, and then you’ll see Roger will really blast CNBC. But why show your hand at this stage?
Capital structure: Any chance of dividend payouts, etc? We’ve done $14B of buybacks in past few years. Hasn’t done us much good. But at least we’ve done that much. Time Warner has spent tens of billions. CBS, Viacom, all the companies have done it. What has it done for them? It’s gotten them a lot of debt. We’re comfortable with our debt. We don’t have a lot of cash. We did have a lot, but we spent it on Dow Jones. We are not on the hunt for big multibillion dollar things. We think things will get cheaper by the way, and we might get tempted for smaller things. We’re very happy with the profit drivers we have.
Audience Q&A: Want to buy other Web assets? We look at stuff all the time. The VCs bring in things all the time, some of which are interesting, but they all have stupid prices on them. We’re very cautious, sometimes too cautious. But it would be very easy to waste a lot of money on Internet sites.
Martha Stewart (!) has a question for Rupert: She loves the Kindle! She wants to know what Rupe thinks about e-books, and the deal WSJ has struck with Amazon. Rupert doesn’t know about the deal specifically. In general, he says, subscription tiers for the WSJ are screwed up and have to get fixed. “We clearly undersell the Journal. Absolutely.” Martha really pushing hard on Kindle WSJ subs. Rupe really isn’t up to speed on it. But says he’s happy to charge Martha more for her Kindle subscription if she wants.