Commentary

Murdoch's Play for Newsday

  • by , Featured Contributor, April 24, 2008

As you probably all know, Rupert Murdoch appears to be close to buying Newsday from Tribune and its new owner, Sam Zell, for $580 million. Newsday is the 400,000-circulation newspaper that dominates Long Island, New York, a major suburban market of New York City.

Is Murdochnuts? What is he doing buying a big old "ink on dead trees" business for so much money, when the future is all about the Internet and Web 2.0 sites like his own MySpace, which are wrecking the future for newspapers like Newsday and its brethren? No, I certainly don't think that Murdoch is nuts. You can call him determined and stubborn. You can say he has tunnel vision in his quest to reshape the U.S. media landscape, but I don't think you can say he's crazy for trying to buy Newsday. Here's why:

  • Great newspaper. While I wouldn't want to own a large metro daily these days, suburban newspapers are much more attractive. Print still matters to consumers and advertisers. Newsday is one of the best suburban dailies in the country.

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  • Great price. He's buying the property in a fire sale, since everyone knows that Sam Zell has debt payments to meet. As the third largest newspaper in the former Tribune empire, Newsday certainly represents a lot more than 7% of the $8 billion that Zell paid just last year for the entire company.

  • Regional footprint. Murdoch already has the New York Post and the Wall Street Journal in his stable; adding Newsday to the combination will offer advertisers extraordinary reach into one of the world's largest consumer bases of newspaper readers. Watch out, New York Times and New York Daily News. The regional ad game is about to change for you in a big -- and not a good -- way. Of course, Murdoch also owns two local television stations, which someday may be able to drive ad synergy as well.

  • Printing and distribution economies. Murdoch is already on a path to saving tens of millions of dollars per year by printing the Post on the same presses as WSJ. I am sure that he'll do the same with Newsday, thus saving more tens of millions.

  • Leadership. While everyone else in the newspaper world is playing defense, Murdoch is playing offense. That means a lot to the market, particularly advertisers and employees. If you're a great salesperson or writer or editor, wouldn't you rather work for someone that tries to create their future -- rather than succumb to it?

    I think that the Newsday deal, if it happens, will be a good one for Murdoch. What do you think?

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