Inside the media wars

Ialmost met Rupert Murdoch once. I was at The Wall Street Journal in New York and he, as founder and chairman of News Corp (which owns the paper), was ensconced on the upper floors, being a hands-on newspaperman.

Even then, at 80-something and with the phone-hacking scandal neatly tucked away, the press lord’s presence, and by extension influence, was felt in not so subtle ways: the air thick with the prospect that he might come down and walk the floor, greeting reporters and editors, as if on a royal tour.

If you need a little reminder on how he came to own the Pulitzer prize-winning paper, here we go: Murdoch’s Us$60/share bid valued The Wall Street Journal publisher Dow Jones at $5bn, offering a 67% premium for the Bancroft family-owned empire.

This was in 2007, when newspaper share prices had been flagging for more than two years and the costs of newsprint, production and distribution were rising quickly. The Bancrofts had owned The Wall Street Journal for more than a century. Their maxim was “never sell Grandpa’s paper”, but a family division between journalisticprinciple idealists and those more focused on making a buck created a chasm of opportunity. More breathtaking than Murdoch’s offer was the seeming mismatch between the venerable business publication — in many ways a bastion of conservative thinking and elegant writing — and other animals in News Corp’s stable, including The Sun (of page 3 topless-model fame) and the New York Post.

Nevertheless, after three months of wrangling, just over half of the family’s 64.2% voting stake was cast in favour of the deal. Murdoch had coveted the paper for nearly two decades. Sarah Ellison, a Wall Street Journal reporter who covered the takeover, went on to write a book, War at The Wall Street Journal. It really is worth a read.

Hindsight has shown us that Murdoch overpaid. Almost a year after the sale, he wrote down $3bn of his investment. According to Ellison, bankers and lawyers who worked on the deal at the time said they had hardly ever seen a gap so large between what a company was worth and what a buyer was willing to pay.

Fresh deals

e:

By now you would have heard that US cable TV giant Comcast (the owner of NBC and film studio Universal) has outbid Murdoch with a £22bn offer for British broadcaster Sky.

It’s a 16% premium on the existing bid by 21st Century Fox.

This could disrupt Murdoch’s attempt to buy the 61% of the company he doesn’t already own, in his years-long effort to secure an even larger presence in the media market. And also his plan to sell Sky on to Disney as part of a $60bn asset sale.

Comcast boss Brian Roberts, who visited Britain late last year, is said to have been impressed by Sky’s technology. He was also swayed by the outcome of the recent Premier League rights auction, which has eased Sky’s cost burden and sparked calls from non-murdoch shareholders for a richer bid. The timing is interesting. Fox’s bid has run into difficulties with UK regulators, who say the deal could concentrate too much power with the media mogul. Murdoch already owns three of Britain’s biggest newspapers: The Sun, The Times and The Sunday Times.

My hunch is that we’re heading for a bidding war. Sky is, after all, the

UK’S biggest pay-tv company.

Murdoch has been called many things, but not a “throw-in-the-towel” kind of guy.