Rupert Murdoch and the Fire Sale of the Vanities

 

There are rumours that Rupert Murdoch is going to fly into London later this week.  So, as he lifts his old bones into his Learjet, I wonder what’s on his mind? Is he on his way to shut down the Sun, or is he going to divest himself of all of his newspaper ‘vanities’?

What’s clear is that News Corps is doing what has to be done to protect itself from the fall out of the News International scandals here in the UK. If that means the News Corps Management and Standards Committee has to ‘drain the swamp’ by trashing ‘journos’, it will be done.  If it means getting rid of his British newspaper titles, it will be done. News Corp has to distance itself from News International. This has to be his number one preoccupation at the moment.

What Murdoch cannot afford is for Ofcom to review his stake in BSkyB and find that he’s not a ‘fit and proper’ person to run such a company. That would spell the end of the Murdoch dynasty and very likely be the precursor to the unravelling of the whole of News Corp.

The bottom line is that Murdoch’s newspaper titles in the UK have become an embarrassment and a liability. To get shot of them might injure his pride and dent his ego, but he has to clean up his act and be seen to be acting responsibly. And anyway, the profits from News Corp’s non newspaper interests are now so big that he cannot allow them to be jeopardised.

So, what are his options? He could just close down all his UK titles and walk away. It would be expensive, but not in relation to the alternatives he might be faced with if things didn’t go his way. He could ‘tough it out’; threaten to hang the Tories out to dry at the first hint of an Ofcom referral. After all he still has the power to make life difficult for the political class. Actually, he’s choreographing his every move, not for the benefit of his British interests, but for his American audience. He’s scared witless of the US Justice Department. Why? Because they can threaten the whole of News Corp.  Scotland Yard, and it’s the Police investigations that are probably going to cause him the most grief, can only affect News International.

Murdoch has been publicly humiliated and had has had his reputation (such as it was) ruined. Will he be tempted to get rid of News International titles? Tempted, yes, but when push comes to shove he’ll probably hang on to them. Why? Because it really would be a fire sale: that would go against the grain. But more because the resulting job losses from any precipitous action would probably provoke a public and political backlash which would not work in his long-term best interests.

Being a true entrepreneur, someone  who thrives on a challenge and who can sniff opportunity even in the darkest of times,  it would be my guess that he’ll hang on in there – and launch the Sun on Sunday.

 

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