Rupert Murdoch on newspapers. Extract from the full transcript of his earnings call last week. He is pretty bullish, all things considered.
“[T]his is the worst global economics crisis we witnessed since NewsCorp was established more than 50 years ago… While it’s impossible to be completely prepared for a downturn of this magnitude, we began priming ourselves for a weakening economy earlier last year. We implemented strict cost cutting measures across all our operations. We reduced head count in individual businesses where appropriate and we scaled back on capital expenditures.
… [W]e continue to believe in newspapers and their brand extensions and television and film as mass media. Quite simply, as long as advertisers need to move product and fill brands, these industries will remain strong and the market leaders will be the strongest.
We continue to gain market share in the newspaper business. Beyond gains of the Wall Street Journal, market share in the UK is up year-over-year with gains in The Sun, The Times, The Sunday Times and the News of the World. And we are also very lucky that the vast majority of our titles are not at all dependent on classified advertisements.
… our underlying philosophy here is and I think it could be, most of you would agree with it, that on a global basis, we see in our business an increasing shift to subscription businesses but will mass media still be a big factor? Absolutely.
[At the Wall Street Journal] the increase in circulation revenue is, as I explained to you it is a slow process although a very strong one… The revenue I have got to tell you and particularly in the last — well January was bad, ad volume was bad . But it is very short-term. And it is very hard to get a visibility into the future there. We have the New York Times cutting rates against us. We will not cut our rates. So, we are down at the moment about 20% in advertising.
The general display advertising, if it can be very specific such as it is with the Wall Street Journal where we have a very healthy increase and I think our group there are going to do about a $120 million this year in advertising. That is fine, but overall, you have a problem in that there is an almost infinite increase in inventory for websites and for display. So, there is constant downward pressure on the rates you could get. I think we have to find new ways to monetize our huge audiences.
… Many a time, this advertising is certainly going to rush to the internet. Whether it goes to newspapers or television or outdoor, I think it will depend on the advertiser.
Different newspapers have differing dependence on advertising. Those that are most dependent on particularly classified advertising are getting hurt the most, but it is a cyclical matter.