Murdoch pledges to make online news pay
By Miriam Steffens | smh.com.au | 07 August
Rupert Murdoch has vowed to make consumers pay for news on its websites in the next 12 months, determined to cut News Corp's dependence on shrinking advertising revenues which led to a $US3.4 billion ($4 billion) loss for the year to June.
Seeking to counter the leakage of dollars to the internet, which has slashed the profitability of his global empire, the 78-year- old media mogul said yesterday he was confident the company could "produce significant revenues from the sale of digital newspaper content".
"The extended downturn has only increased the drumbeats of change, but the secular challenge is clear," Mr Murdoch said. "Classified advertising revenues will never again reach the levels that print once offered."
News booked more than $US9.2 billion in write-downs and other charges in the past year to account for the falling value of its newspapers and other businesses during the global recession and pay for more than 3700 job cuts worldwide.
Excluding those charges, operating income fell 32 per cent to $US3.6 billion. Mr Murdoch predicted a return to profit growth in the "high single-digit range" for 2009-10, but warned there were "a tough few months ahead'.'
"I think the worst may be behind us, but there are no clear signs yet of a fast economic recovery," he said, toning down his optimism from three months ago.
In the June quarter, News swung to a net loss of $US203 million from a $US1.1 billion profit a year ago. Earnings from free-to-air television fell 66 per cent and its papers suffered a 63 per cent slump, more than offsetting a 39 per cent profit jump at its pay TV businesses.
Ad revenue at its Australian newspapers, which include The Daily Telegraph, fell 18 per cent on a 30 per cent slump in classifieds, while circulation remained flat in the quarter.
Mr Murdoch remained scant on details about his internet business model, which could include online subscriptions, charging fees to read single stories and selling content on new platforms such as mobile devices.
But he said the company would introduce fees across all its news sites, having been convinced by the success of The Wall Street Journal's subscription model that readers were willing to pay for quality content.
Taking a swipe at free aggregator sites such as Google, he said News would be asserting its copyright "at every point". The company has set up teams in Sydney, London and New York to work on charging models, looking at the success of pay TV.
A spokesman said there was a "real possibility" of fees at its local sites this time next year.
While the editor of the Financial Times, Lionel Barber, recently said "almost all" news companies would charge for online content within a year, many are sceptical that publishers can turn back the clock and make readers pay for content they have been able to access for free.
Looking at News's prospects of success, some argued that micro-payments for single stories could be more promising than outright subscriptions.
Fairfax Media, publisher of the Herald, remained lukewarm on fees outside its existing subscription site of The Australian Financial Review. "We'd love to believe there is way to charge for content online . . . but I don't think we have as definitive a view as Mr Murdoch," said Jack Matthews, head of Fairfax's digital unit.
The News Corp boss seemed unperturbed being the first to go ahead with the model. "If we're successful, we will be followed by all the media," he said.
First published by Smh.com.au on August 07 2009
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