Murdoch: Good Time To Get 'Bigger Share' Of Cable

Rupert MurdochNews Corp. chief Rupert Murdoch indicated Wednesday that he's from the invest-and-wait school--rather than pull-back-and-hope--when it comes to riding out an economic downturn.

 

Citing cable channels as a principal growth engine, Murdoch said they now offer a "great chance ... to get a bigger share, to make our franchises even more dominant." He was also speaking about newspapers--and he believes The Wall Street Journal is in a better position than most.

"Hard times are good for big companies," he said at an investor event.

For cable--which offers a somewhat secure revenue stream from distributor payments--Murdoch said his two new networks are on their way to profitability. The Big Ten Network, where the company owns a half stake, cost $83 million to launch last year. But with recent distribution deals, it on pace for a small profit this year. The Fox Business Channel is on track to become profitable by 2010 or 2011.

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In general, Murdoch said News Corp. is looking to reduce its reliance on ad dollars. "Our emphasis is going to be more and more away from any traditional type of old-media advertising toward [a] subscription model," he said. Murdoch had wanted to begin offering the WSJ's Web site for free, but opted to keep pay-for-play.

Still, advertising on the Internet is to be embraced. He said MySpace is selling home-page takeover positions for an average of $500,000 a day, and sometimes, up to $1 million. On Wednesday, Lionsgate was promoting new film "My Best Friend's Girl" there.

Within the U.S. free-TV marketplace, Murdoch cited what appears to be an increasing dichotomy between broadcast networks and local stations. Networks appear to be weathering the downturn with some success. Murdoch said upfront cancellations for Fox have been minimal, and any open slots have already been filled, although the stations are in rocky waters.

One reason could be the Internet. Advertisers may be using broadcast networks' reach for brand-building, then opting to spend heavily on the Web to drive transactions more efficiently. That dynamic could apply to the auto category, where research is aplenty online.

In fact, a drop in auto spending at the local level is the chief reason for local stations' tough times. News Corp. owns more than two dozen of them (affiliated with Fox and MyNetworkTV), and Murdoch said the auto business--a category that makes up one-third of revenues--is down 40%.

But, again, he said News Corp. is looking to encroach on competitors' turf. "The local television market in this country--no point in hiding it--is bad," he said. "We think we're increasing our share, and other people are doing slightly worse."

He added that management is "fighting very hard" to keep revenue declines in the 15% range.

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