As Rupert Murdoch completes and considers more grandiose media acquisitions, his empire looks on increasingly shaky ground, writes former News Ltd executive Rodney E. Lever.
This is the first of a series of reports by Rod Lever on the Murdoch Empire to be published by IA over the next few days.
Vice is the name of an online daily news service, given birth in Montreal, Canada, in 1994, and now picking up a rapidly growing audience throughout America. It has been largely ignored by the mainstream media, as were the earlier Australian digital news sources, like Independent Australia.
The audience for Vice is mostly young people with a focus on sex and drugs and wild parties. Catering for a population that outstrips Australia by more than 400 million potential readers it has still quietly become a healthy business empire that caught the eye of Rupert Murdoch, who picked up a five per cent share of Vice last year.
Murdoch’s purchasing tactics over the past sixty years have always been the same. He starts with a tiny investment. If the business continues to grow and it suits his plans, he will one day swallow the whole company.
Traditional newspapers have always aimed at adult readers — from the middle twenties onwards and upwards. The stuff young people read, was the common theme, is mostly comics and sexy magazines.
“When we first started doing news everyone told us, in established media and legacy media, ‘Young people don’t care about news. American youth don’t care about international news.'
"We didn’t believe that.”
He claimed that his team had developed their news network after polling their potential audience and asking questions about the kind of news they wanted. Now Vice clips are among the most popular on YouTube in the US, feeding news from wars and international disasters, climate change news and humanitarian events as well as the more salacious, gossipy type of reporting that Murdoch admires.
They have have averaged 165 million YouTube video views every month, a huge number by Australian standards.
Shane Smith has confessed an admiration for Rupert Murdoch and admits that he adopted the styles of Murdoch’s international newspapers. In one interview, he confessed that he would like to be the Rupert Murdoch of the next generation. He was overjoyed when Murdoch paid $US70 million through 21st Century Fox for his stake in Vice.
As always, Murdoch acts on several levels of acquisitions, from his Wall Street Journal and The Times of London, down to the level of the News of the World, which he dumped when it blew up into a national scandal in the UK.
Another new venture was his purchase last month of Harlequin — a large publishing company specialising in romance novel and a company whose revenues have steadily declined by 25 per cent a year over the past four or five years.
Harlequin's total revenue last year was listed as $US398 million. Murdoch’s offer was slightly more than that when he clinched the deal. Why?
He wants to bring down the five largest book publishing companies in the world to four. And then to three and then to two and then to…?
Just imagine his power then!
Murdoch’s original HarperCollins merger led to on-going, but still unsettled, negotiations with Simon and Schuster and Macmillan. He has already added the Penguin Random House merger to HarperCollins.
Not only would he then be the world’s largest book publisher, he would have free access to practically every worthwhile book ever published − to be turned into movie and television productions, English and foreign − all over the world. Combined with his political power and his control of so many news sources, it would make Rupert Murdoch one of the most powerful people in history.
As if that was not enough, in another burst of frantic hyperactivity, he has proposed turning his BSkyB British television company into a giant European satellite TV system estimated to cost $US14 billion dollars. He would acquire control of Germany’s Sky Deutschland and Italy’s Sky Italia under the umbrella of 21st Century Fox.
It would be the world’s biggest combined pay TV operation, selling satellite coverage to about ten million European homes.
At the age of 84, Rupert probably only has a few years to live, but his two sons − now in their forties − and the rest of the Murdoch family, will inherit the money and the power.
Does the Murdoch family want this? Do the people of the world want such an outcome? Doesn’t it smack of mad men, like Napoleon — or Mugabe in Africa or Vladimir Putin in modern Russia.
One dark cloud hangs over the Murdochs. It lies within the walls of London’s historic Old Bailey court house.
As you read this, a senior British judge is laboriously preparing his final instructions to the jurors who will decide the fate of several former Murdoch employees, most notably Rebekah Brooks and Andy Coulson, who have, with others, been grilled for months by some of the smartest prosecuting lawyers in Britain over phone hacking and other alleged criminal activity.
That judge is obliged to read carefully through every word of the evidence given in those trials in preparation for the jurors’ deliberations and his legal advice to them. The outcome could be mild, or it could be dynamite for all those Murdoch employees who faced charges.
A decision by the British government to strip him of his investment in BSkyB UK would certainly wipe away his dreams for a massive European pay TV venture.
On the sideline is the Criminal Division of the US Department of Justice, awaiting the outcome of the British trials for any evidence that Rupert Murdoch and/or his son James actually knew of, or authorised, any illegal payments or bribes to any person or persons employed by the British government.
America takes a grim view of the bribery of officials not only in its own land but in other countries as well, and the sentences their courts might impose include serious jail terms.
The outcome of the London trials may well shape the future for Rupert Murdoch and his family.
It is well to recognise that while alternative mechanical printed newspapers are struggling because of vanishing revenues, Murdoch and his successors can still afford to continue to freely circulate their own personal political propaganda through their own newspapers, while writing off the costs as tax deductions, for as long as those newspapers remain active.
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