Rupert Murdoch: The Future of Newspapers

Peter Robinson:Welcome to Uncommon Knowledge. Im Peter Robinson. On the unexpected death of his father, Keith Rupert Murdoch became the proprietor of the Adelaide News a the age of 22. Today, some five and a half decades later, Rupert Murdoch owns the controlling interest in the News Corporation, which in turn owns media properties on five continents; properties that include some 170 newspapers, dozens of television stations, half a dozen television networks, a publishing company, and a movie studio. The number of people who everyday receive news or entertainment from a property owned by the man seated across the table from me is some 200 million. Rupert Murdoch thank you for joining me. Rupert Murdoch:Thank you Peter. Peter Robinson:Well talk in a moment about your underlying approach to business, but first one perfectly straightforward question. When in July 2007, the News Corporation purchased Dow Jones, you paid $5 billion or $60 a share which was premium of about two-thirds over the share price before news of your offer became public. Why was Dow Jones worth $2 billion more to you than it was to the market? Why did you see value that the market didnt see? Rupert Murdoch:We saw in the Wall Street Journal, and in the whole business of financial information. You know, a great central franchise there, and something that we could develop as a national newspaper that could be unique in this country. And thats what were still working at very hard. And the fact but the price was it was a bit of it like us, a bit of it was held by, in voting shares. Peter Robinson:Right. Rupert Murdoch:By a tight family that turned out to be not quite so tight. And we, to get them to break or to move, you know, $6.00 was the sort of magic number. Peter Robinson:I see. Rupert Murdoch:Per share. Peter Robinson:But, well of course, since you purchased, the advertising world has collapsed and. Rupert Murdoch:Yes, it was different times. Peter Robinson:Of course it was different Rupert Murdoch:I mean today they would have been giving it to you probably. Peter Robinson:So, but no regrets about the purchase or the price you paid at the time. Rupert Murdoch:None at all. Peter Robinson:All right. Segment one: On the Cusp. Rupert Murdoch, February 2010. Im quoting you. The News Corporation is on the cusp of a digital dynasty. Content is not just King, it is the Emperor. Explain yourself. Rupert Murdoch:Its funny, because see, Steve Jobs was in yesterday sharing his new iPad. And I went through that with him again. I said, Look youre going to invent all these things. And theyre wonderful, brilliant, but they mean nothing if you havent got content to put on them. And he agreed completely. Peter Robinson:Its Rupert Murdoch:Yes, youre going to have iPods, anything you like, if you cant do all these someones got to supply. Peter Robinson:Right. Rupert Murdoch:The information. Peter Robinson:Okay. So, I want to get back to the digital world, the electronic world in a moment. But first lets go to, to the business to which youve dedicated most of your life. Newspapers, two sets of figures. September 2007, just over a month after your purchase of the Wall Street Journal. Total paid weekday circulation for the Wall Street Journal 2,011, 882. Total paid weekday circulation for the New York Times, 1,000,665. October 2009, the figure for the Wall Street Journal is 2,024,000, up about half a percent. Circulation for the New York Times, 927,000, down more than seven percent. And the New York Times wasnt alone. Of the ten biggest newspapers in the country, over that period only one, the Wall Street Journal, increased circulation. How did you do that? Rupert Murdoch:I think we just kept improving the quality. We didnt do any special promotions. In fact we put the price up for subscriptions. But we slowly brought in widened the paper and it made it better and more, I think, more reliable. I think I had much greater judgment now in coverage of foreign news. We have wonderful correspondents. Weve made improved our Washington coverage greatly. We got a long way to go in a lot of areas yet. But, we want to widen this audience, and specialize in some other areas too, such as health and so on. Peter Robinson:And that doesnt place at risk the franchise of the business information, the business audience. Rupert Murdoch:Um-hum. Peter Robinson:You believe you can retain that audience while broadening it to make it a truly national newspaper. Rupert Murdoch:Absolutely. You know, its got, its called the Wall Street Journal. Peter Robinson:Right. Rupert Murdoch:But for 50 years theyve been saying, Its the Main Street Journal. It is for the small business owner, or businessman, or person involved in business in anyway, all across the country. Its not just for Wall Street bankers. Peter Robinson:David Carr, writing in the New York Times. Carr says that Robert Thompson, the managing editor of the Wall Street Journal. And Jerrod Baker, the Deputy Managing Editor, quote, The two men have had a big impact on the papers in Washington coverage, adopting a more conservative tone and editing and headlining articles to reflect chronic skepticism of the current administration. Closed quote. Fair? Rupert Murdoch:I dont think its become a conservative maybe a little more balanced. I, if you read into every story, you know, very carefully. You certainly, it certainly hasnt become conservative. Were there, in the past, a few correspondents there who had a bit of a left wing tinge in what, in the way they covered stories? Yes, probably. Peter Robinson:Can I? According to the Gallup organization, 20 percent of Americans call themselves liberals, 40 percent call themselves conservative. I think we can accept, given the various polls that have done, been done, through the years that there is newsroom surveys that overwhelmingly newspapers in this country are dominated by editors and reporters who are liberal. Why shouldnt the Wall Street Journal be quite straightforward about saying, We intend to be a newspaper for the rest of Americans, and incidentally that market is twice as large. Or is there a danger in being explicit about it? How do you think that through? (Crosstalk) Peter Robinson:How do you think that through? Rupert Murdoch:We want to be objective, as you, as one can be. And as thorough as one can be. And we think the rest of the press is monolithically very often unfair. But youve forgot to mention the 40 percent of Americans and to call themselves independents. Peter Robinson:Yes. Rupert Murdoch:Now, there are people who dont like either party. Theyre not about to join the Republican party or or the Democratic party. This country is, Id say, vaguely center-right in mood. And if you look at me, and a few people you might say, Were a little bit more right than that. But the paper, I dont think its the theres no question that the editorial writer, the opinion pages of the back of the paper, of the front section. I consistently take a, take a pretty conservative attitude. Theyre never endorse candidates. Peter Robinson:Right. Rupert Murdoch:But, they look very skeptically at big government and whats going on in Washington. Peter Robinson:All right. Segment two newspapers in the electronic age. Let me quote a golden age of freedom. This is a book based on the Boyer lectures you gave in Australia. This is not available on Amazon, its only available in Australia by the way. Let me quote you, I have a simple and provocative proposition. Winging about technology will get you nowhere. The more serious challenge is the complacency and condescension that festers at the heart of some newsrooms. Would you care to name any of those newsrooms? Rupert Murdoch:I think, no. But I think most newsrooms are very concerned with loss of jobs, loss of circulation, whats happening, lots of readership to the Internet. And dont see really what they are. Newspapers seen as tangible tactile things. Peter Robinson:Right. Rupert Murdoch:I think weve got to look at these organizations as news organs, and news organizations so that we dont mind how our words are read by the public. Whether theyre on the new iPad or the Kindle, or other things that have are coming or, on paper itself. But the words should be the same. Peter Robinson:All right. Last summer, former CBS anchor Dan Rather. Delivered an address at the Aspen Institute, during which he actually became teary eyed. Let me quote him. Its time the government made an effort to ensure the survival of the free press. If we do nothing more than stand back and hope that innovation alone will solve this crisis, then our best trained journalists will lose their job. The government is bailing out the banks. The government is bailing out the auto industries. Why shouldnt the government bail out the newspaper business. Rupert Murdoch:I think youre talking rubbish and I and very dangerous rubbish. We dont government money in that we want a free press. Its essential to the democracy that we have a free, and as far as possible, competitive press. Or competitive information industry if you will. And you wont get that if you start having government dollars coming in. Peter Robinson:Now, you, I am to quote again from the Golden Age of Freedom, Readers want what theyve always wanted. A source they can trust. In short we are moving from newspapers to news brands. Explain what you mean by brand in that context. Rupert Murdoch:Well I think the Wall Street Journal, maybe the New York Times, maybe the London Times, maybe you know, The Post for that matter are known for what they are. And read and enjoyed for what they are. And I think they should keep that. And weve got to strengthen those brands very much because as the old printed newspaper becomes less. Peter Robinson:Right. Rupert Murdoch:And the new electronic newspaper becomes much more, the cost of entry in the competition. Peter Robinson:Right, right, right. Rupert Murdoch:Is going to be a lot easier. Peter Robinson:Right, right. Rupert Murdoch:Which is a great thing for the country, isnt it. Its not so good for companies like mine. Peter Robinson:Well, that Rupert Murdoch:Ive always said we have to protect ourselves by getting better, and better. And being trusted in just 100 percent. Peter Robinson:So, that Ive got here todays New York Post, and The Journal. And of course you can see in the physical object youve got a lot of ways of communicating the brand. Heres the, the New York Post, the shape of the paper, the feel of it says, tabloid journal. Weve got a, a sort of a classy broad sheet and feel. The size of the headlines, the placement of the photos. And you can just, you can communicate the brand the feel of the newspapers, literally, in some ways the feel of the newspaper. Rupert Murdoch:I love that, I love it but you see it so happens, New York Post, they are a tabloid, for what that means in America. In fact, we are on exactly the same story, which is the economic crisis. Peter Robinson:Right. Rupert Murdoch:As the Wall Street Journal is, and naturally, being a popular paper, were on about the Super Bowl, which is two days away. Peter Robinson:Right, right. But when you look at these, when you reduce this post and the journal to the iPad that Steve Jobs was showing you yesterday. Rupert Murdoch:Um-hum. Peter Robinson:Same size screen. Totally flat, pixels. In other words, isnt, isnt it going to be harder to communicate a feel for a paper. To communicate the brand over the Internet? Rupert Murdoch:No, I dont think so. Peter Robinson:You dont think so. Rupert Murdoch:Were working very hard about it. (Crosstalk) Rupert Murdoch:Some people may lose it. I think if it just comes out looking like a dotcom if you will, youre in great danger of losing it. Peter Robinson:So design is going to be essential. Rupert Murdoch:Design and presentation. Peter Robinson:The feel of the story. Rupert Murdoch:Yes. And well be in there doing a lot of work now. Weve got people working all over the world on it. As other people have. And therell be many experiments. And well see, what people, how people like to read their news. Peter Robinson:Right. Let me this business about the barriers to entry dropping, and the question about branding. Ill fumble as I put this to you but I think there is an important question here. Say the Huffington Post. Rupert Murdoch:Yes. Peter Robinson:No fixed costs of printing presses or distribution, no department that knows how to hype, how to purchase newsprint cheaply from Kent. They dont have to worry about any of that. Are they going to be able to develop a brand identity quickly enough? Will they be able to catch up with the Washington Post, or indeed the Wall Street Journal? Or brands is it the nature of a brand that it takes decades to develop? Rupert Murdoch:I think it takes decades but not necessarily. I think that the Huffington Post is a non-profit organization virtually. Theyre going to have to charge for it. Peter Robinson:Fighting words? All right. Rupert Murdoch:No, no, no nobody makes money on the internet, depending on display advertising. Peter Robinson:All right. Rupert Murdoch:Theyre not going to make any real money off search and Google. And I think theyre going to be under threat from Apple and other people. Theyre going to see some very interesting battles in Silicon Valley between the giants. But theyll be the two giants that will clash rather than Microsoft. Peter Robinson:So new ventures. Your judgment then is that new ventures such as the Huffington Post had better be on your radar because they do have a chance at it if theyre smart. They can develop brand identity for Rupert Murdoch:Yes, they can if they want to, yes. I mean, we might even were looking at one of them, one of the business models were looking at is offering on the iSlate a bundle of newspapers, and which would include some competitors. Peter Robinson:I see. Rupert Murdoch:And were not having, averse to putting competitors with different views. All for one price which might be five, six dollars a week. Is that right? I think, give people a number of newspapers. Peter Robinson:I see, okay. All right. Segment three. The proprietor. A number of features appear again, and again, throughout your career. One is the impulse to build. When your father died and you took over the Adelaide News one regional newspaper within a few years, which is to say while you were still in your twenties, you purchased the Sunday Times in Perth. You purchased Suburban and provincial newspapers in New South Whales, Queensland, Victoria, the Northern Territory. And you purchased the Daily Mirror in Sydney. Your father didnt do that sort of acquisitive building. You did in your twenty where did that come from? Where did that come from? Rupert Murdoch:Well he did well because he was, I thought, a great man. But he was the, he had built a great newspaper, group if you like. But as an editor and then a managing editor, and onto chief executive. He didnt own them. And was in Melbourne, and I experienced that sort of life. Peter Robinson:Right. Rupert Murdoch:And couldnt imagine any other life as good as that, as running newspapers or being in that so involved in current affairs and everything. And there I was into the Adelaide, and with the Adelaide News in a, in an interesting and cheeky war against their much bigger paper. And we did buy some things but they were all things that were going broke. And so were going to try and turn things around. Peter Robinson:Was there a moment Rupert Murdoch:And baffle them, and they were very opportunistic things that, in the effort to be bigger than just Adelaide. Peter Robinson:So, did you say to yourself as a business matter I have to build in order to continue competing in Australia. Or did you say to yourself, equity, I want to own properties? Rupert Murdoch:No, in order to compete because so much we could there was so little we could do just in Adelaide. You know, we were buying cartoons and stories from features, from bigger newspapers, and bigger cities. And I said, and that one later my same motivation in television from a little television station in Adelaide. Having to take programs from bigger things. And then, finally, I got bigger. I finally had to take him to Hollywood and it all led to me taking the opportune when it came, many years later the opportunity to actually have a studio where you make your own product. Peter Robinson:All right. I still think theres something exceptional there even though to you it all felt like a natural progression. Rupert Murdoch:Um-hum. Peter Robinson:Its a striking progression Rupert Murdoch:Well it was opportunistic and then it was like London. I worked as a cadet almost. Peter Robinson:Right. Rupert Murdoch:After I left Oxford for a year on the London Daily Express and just loved every minute of it. And knew all the people there. And 15 years later in the midst of coming to the end of a huge war. Peter Robinson:Right. Rupert Murdoch:Tabloids in Sydney. I couldnt understand how three of us could survive in Sydney if only just and there was only one in the whole of Britain. Peter Robinson:Right, right. Rupert Murdoch:So, you know. Peter Robinson:Right. Rupert Murdoch:I took the first opportunity I had to jump in there. Peter Robinson:Heres another feat youre leading to another feature of your career which is taking on the establishment. Taking on various establishments. I, you become proprietor of your fathers paper, the Adelaide News. And the big newspaper in town, the Adelaide Advertiser leans on you and sends your mother a letter. Rupert Murdoch:Um-hum. Peter Robinson:Pressuring her to sell to them. And what did then, 24-year-old Rupert Murdoch do? He published the letter on the front page of the Adelaide News and started a circulation war with the Adelaide advertiser. And did pretty well out of it. Rupert Murdoch:Right. Peter Robinson:Years later youre in Britain. The printers union is choking the newspaper business in Britain. You see Critley begin putting state of the art printing presses in a warehouse in Whopping. An undistinguished suburb of London. And then you suddenly announced that you are moving the Times of London, this mythic property from Fleet Street out to the warehouse in Whopping. And you just took them. In fact, you tell what happened as a result of that move? The unions did not like it, to put it mildly. Rupert Murdoch:We had a horrible strike. We always had the London Sun and a different pub, which was printing four million copies a day and to some respects less. Those are the times. Peter Robinson:The Sunday (Crosstalk) Rupert Murdoch:The Sunday Times was a big property. Peter Robinson:The Sun was and I believe still remains the biggest circulation English language newspaper in the world. Is that not so? Rupert Murdoch:Oh, yes yes, certainly. Peter Robinson:Correct? All right. Rupert Murdoch:And his dinks still very, very well. But what happened was. I mean the unions I cant begin to describe. The old craft unions and how they behaved, and continued to behave. We all are newspapers. There wasnt a newspaper that didnt miss an edition once a week or so something. Peter Robinson:Right. Rupert Murdoch:Or appear full of mistakes because people are fighting for anything. And the publishers at Worth, always get together once a week as they were going to stand together. And then, before they got back to their offices, someone had broken down and given into it. So, I just waited until I thought I was big enough and strong enough. And things changed but we, but out of a labor government or conservative government, although we didnt get. We never had any contact or asked for any help. They automatically did at least protect us with a lot of police, and some. But yes, when the contracts came to an end, we presented them with a new contract which we knew they would reject. So we just went on printing but edited from place. And with different distribution over the whole country, which had been planned in great detail for a year with a huge operation and very, very nice. Because we immediately had thousands of people at our front gates. And, uhm Peter Robinson:Willing to work. Rupert Murdoch:No. Peter Robinson:The protesting, you mean. Rupert Murdoch:Protesting. Peter Robinson:Right. Rupert Murdoch:Not just us strikers but (Crosstalk) Peter Robinson:He got violent. He got violent. Rupert Murdoch:Its amazing in the middle of the 80s. It doesnt sound so long ago. The people like their workers revolutionary party, the trotskyites, or whatever. They all came out on the Saturday night and a Wednesday night. That was like a big night out for them. And the police would be there, and the horses. And theyd be throwing darts into the back of the horses who would rear up. And the television lights would come on. And we, what was really interesting was the major industrial figures. People like the head of ICI, and so on, went on the BBC and said, This is not the British way to conduct relations. But we couldnt get to those players anyway. After a couple of weeks I had a deal with a, with the head of the union, secretly. And he was the, a very nice lady. And I never heard from her again. She couldnt summit to the union at all. Peter Robinson:Um-hum. Rupert Murdoch:So they stayed out. And a year later they settled that theyd never come back and take one week pay for every year theyd been working for me. And, which was half of what Id offered a year before. And that was it. Peter Robinson:You tricked them on. Rupert Murdoch:And theres still a lot of bitterness around but not much. Peter Robinson:Right, right. You faced them down. Rupert Murdoch:We faced them down. Peter Robinson:You faced them down. Rupert Murdoch:And it was yes. Peter Robinson:What establishment (Crosstalk) Rupert Murdoch:That was an epic battle. It was the first major in fifty years or certainly, 40 years industrial dispute that had been won in Britain by the, a private employer. Peter Robinson:And if (Crosstalk) Peter Robinson:I would argue that its, that it teed up Mrs. Thatchers battle, the decisive battle with the TUC over the coal mines, you know. Rupert Murdoch:It followed that. Peter Robinson:It followed that? Rupert Murdoch:It followed that. Peter Robinson:Oh, okay. Rupert Murdoch:That was somewhat of a cue to me. Peter Robinson:Oh, I see. All right. So what establishment are you taking on now? Rupert Murdoch:Oh? Nothing like that. But certainly I would say the somewhat monolithic liberal press here. I cant buy any newspapers here and to buy them, any number, for next to nothing. But my shareholders would be in revolt. Not that they can throw me out but it would be very destructive of values. But, no, well get there. And have, I we believe by making far the best newspaper in this country it will rub off onto others. Peter Robinson:Is there room for two national newspapers in the United States? Rupert Murdoch:There should be. Peter Robinson:The Wall Street Journal and the New York Times. Rupert Murdoch:With New York Times. We outsell the outside New York, we outsell the New York Times, by about three and a half to one. In New York, they outsell us by about two to one. So were starting a new edition, all right, in New York with an extra ten pages or so. I don't know how many pages, I think ten pages, or of just New York years. Peter Robinson:You just cant resist a flight. Segment four, liberty. As an undergraduate at Wooster College, Oxford, you attended meetings of the Communist Club of Oxford. And you kept a bust of Lennon in your rooms. Three decades later, youd become a friend and champion of Margaret Thatcher and Ronald Reagan. Explain yourself? Rupert Murdoch:right, I grew up. But I say it wasnt the communist party. And there was, it was a labor Peter Robinson:Were you just playing at it when you were Rupert Murdoch:It was the labor club. Peter Robinson:Labor club for it. All right. (Crosstalk) Rupert Murdoch:And, uhm Peter Robinson:But you supported labor when Clement Atlee was Prime Minister. Clement Atlee was in his final year if I remember it correctly. He was Prime Minister. (Crosstalk) Rupert Murdoch:Oh yes, I remember all my tutors were lecturing me, that, you know, that the world had changed. And the welfare state was the new thing, and so on and Im done. Yes. (Crosstalk) Peter Robinson:So at the age of 21 youd bought it. Rupert Murdoch:And Kevin Atlee wasnt all that bad a Prime Minister. It so happened, it was his cabinet that it was his problem. But, you know, things are different in those days. The conservative party was pathetic. We didnt have the real philosophical things going on that you have today. Peter Robinson:Okay, but. Rupert Murdoch:You know, Id yes, you know, Ive. I guess being in business and, uhm, just growing up. Peter Robinson:Just growing up. All right. Prime Minister Thatcher privatized one industry after another between her taking on the TUC, your taking on the printers unions. Rupert Murdoch:We supported her all the way through. Peter Robinson:All the way through. Ronald Reagan cuts, cut taxes and reduced regulations, and in both Britain and America today, two decades later, the impulse is just the reverse toward expanding this state, toward rolling back the Thatcher achievements and the Reagan achievements. Are you surprised? Did you think Thatcher and Reagan had made permanent progress? Are you surprised to see it? Rupert Murdoch:I thought they had and I still think they have. (Crosstalk) Peter Robinson:Youll have to do. (Crosstalk) Rupert Murdoch:I mean just look at whats happening here and what the mood of this country is today. The western part of the world, if you will, right? North America and Europe are questioning all the precepts of capitalism. The two countries that are screaming for more capitalism are China and Brazil. And, I think were getting into some very dangerous territory here where, with these deficits, and where China is now our greatest creditor and lets us know every week, and as rudely as they can. Peter Robinson:Right, now you right youre right again and a golden age of freedom. In late 1978 Deng Xiaopeng faced a China devastated by years Miles misrule. He made a courageous decision to embrace the market by every measure diet, education, life expectancy. Chinese today are better off than their parents or grandparents. The Chinese have been liberated. To what extent does the fantastically rapid growth in China represent an opportunity for the United States. And to what extent does it represent a political, perhaps even a military danger? Rupert Murdoch:Well I hope its not a military danger but I fear that. Peter Robinson:You do feel that you do fear it? You consider it Rupert Murdoch:Well, slightly, slightly Peter Robinson:You do Rupert Murdoch:I think, you know, we should be doing a lot more. I mean the Chinese navy is already building better submarines than we are. And more of them. Theyre expanding into Africa enormously. Peter Robinson:Right. Rupert Murdoch:Buying anything they can get. Are they going to try and, you know, make the Indian Ocean a Chinese lake, or the Pacific Ocean. I mean there, there are big things to say, but Peter Robinson:Right. Rupert Murdoch:I think, you know, it, within the Chinese character. Theyre very, very proud of the material progress that theyve made. And the position where there are greatest debtor) and they, you know, theyre making up for the bad few hundred years that the western powers gave them. (Crosstalk) Rupert Murdoch:They have long memories. Peter Robinson:Right, right. Let me take you, let me take you to the particular point of friction at the moment. Google Google in mid-December detects a cyber attack. Im quoting you now from Google documents. Google loses intellectual property of its own. It discovers that at least 20 other companies are targeted in this attack. And Im quoting the Google document. A primary goal of the attackers was accessing the accounts of Chinese human rights activists. What is Google doing about it? I quote again, We will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine, if at all. We recognize that this may well mean having to shut down Google China, and potentially our offices in China. Is Google playing this right? What do the Chinese think theyre doing? Rupert Murdoch:Well, Im in a minority here. But I believe they are. Peter Robinson:That Google is playing it right. Rupert Murdoch:Yes, and Im probably in a minority even if I know the people who are running Google. But at least one of the major controllers, and earners are Google who had his youth in Russia. Had made this a great point of principle. And I think that Peter Robinson:And he is right to do so. Rupert Murdoch:Yes, and I, I think its very brave. I dont think its, I think theyre going to lose their business. I dont believe that Peter Robinson:The Chinese will stand on it, will stand firm. Rupert Murdoch:Oh yes, the Chinese are not going to The Chinese are not going to lose face and change their rules. Peter Robinson:Okay. Rupert Murdoch:Not, not under the glare of this publicity. Peter Robinson:Should Google Rupert Murdoch:I mean, you know, Im, in a matter of five-years time it may be quite different. (Crosstalk) Peter Robinson:Could Google have handled it quietly? Could Google, should Google have handled it more quietly. Or you, you think theyre exactly right to face the Chinese and make a point of (Crosstalk) Rupert Murdoch:I think that. Yes. Peter Robinson:You do? Rupert Murdoch:Yes. Peter Robinson:Do the Chinese? Rupert Murdoch:I mean they could have gone and complained privately and so on. But it wouldnt have changed anything. And they would have had to explain why they were pulling out. Peter Robinson:And do the Chinese understand the repercussions of this throughout the western where every businessman whos doing business with China is now, now says to himself, Wait a moment. At the next shareholders meeting somebodys going to stand up and say, why am I not being as brave as the, as Google. Where is our where is the principles of our? Isnt that going to put everybody whos doing business with China, including you in a tight spot? Rupert Murdoch:I dont do business with China. We have a few minor events and we dont operate anything in China. Peter Robinson:Oh, you dont? Oh, all right. Everything is based outside. Rupert Murdoch:Um-hum. Peter Robinson:So but, do you reckon the Chinese know what theyre doing here? Rupert Murdoch:Now, youre going through a period in China where the regime, or the, those who are in control of the regime, who had the majority of the regime. Peter Robinson:Right. Rupert Murdoch:Are clamping down very, very hard on any sort of free expression. And their own local newspapers and everything. And, you know, theyre term will be up in about three years. And then well see. I think there are a whole lot of opinions going on, you know, within. Im speculating, but within the sort of central council of, the inner central council of nine and the conservatives have the majority at the moment. But youre going to see when the next regime comes in. Nothing dramatic but the beginning of an opening up. Peter Robinson:From a Golden Age of Freedom: By 2025, about 520 million Chinese should reach the upper middle-class. These people want the same things we do. Good housing, a first rate education for their children. By 2025, will the Chinese also want and perhaps have obtained some measure of democracy? Rupert Murdoch:2025 is pretty soon, but yes. I believe, you know, youll have the communist party like an umbrella. But there are wings of the communist party and the debates that go on between them now behind closed doors will begin to go on, you know Peter Robinson:In public. Rupert Murdoch:In the public eye. The Chinese are, you know, are very nationalistic, and very patriotic people. I dont see it falling apart or there being a revolution there at all. But will, you know, political debate become more open? Yes, I think it will. Peter Robinson:All right. Segment five, our final segment. The difficult task of getting paid. Rupert Murdoch in his December testimony to the Federal Trade Commission, We need to do a better job of persuading consumers that high quality, reliable news and information does not come free. The critics say people wont pay, I believe they will. You believe because thats a gut instinct based on all your years of business. You believe because youve focus tested it. Fill me in, fill me in. (Crosstalk) Rupert Murdoch:Oh, focus tested it, yes but I dont have great faith in focus tests. Peter Robinson:You dont. Rupert Murdoch:But, a point an example. Is the Kindle, which I dont, which is great for reading books but it is not a great newspaper experience. But almost without solicitation about 30,000 people buy the Wall Street Journal on the Kindle everyday. Peter Robinson:Really? Rupert Murdoch:Yes. Peter Robinson:With all, with no marketing effort to speak of. Rupert Murdoch:None from us, no. Peter Robinson:So, thats okay. Itll be totally different when you get the iPad. I was going to say, What? Is the iPad? Rupert Murdoch:And there will be other I-slates, so whatever, you get it in four colors. Youll be able to do anything on that. Youd be able to do your search, your buy your buy books. See what you can watch movies, television shows, and certainly any number of newspapers. Peter Robinson:All right. Here. Emily Bell who runs the website of the Guardian, which is a big website. The Guardian has a big online readership. Rupert Murdoch:They do. Theyve made a bigger, long-term investment. Peter Robinson:Yep. And her reply to the notion that readers will pay for online comment runs as follows, and I am quoting her: Rubbish, bonkers, a form of madness. Now in your mind this is not even a debate anymore. Shes just wrong and thats all there is to it. Rupert Murdoch:Yes. Peter Robinson:All right. Thank you very much. Just over a week ago as you and I talked the Wall Street Journal went behind a paywall. You cant get it unless you pay for it now. Can you tell results? Whats the metric by which your going to Rupert Murdoch:Yes, weve actually had an increase in circulation, electronic. Well, the WallStreetJournal.com. Peter Robinson:Right. Rupert Murdoch:Yes. Was always behind a pay wall, except for all the editorial comment and op-ed pages. Peter Robinson:Right. You, thats. Rupert Murdoch:You can put a lot of that, now, behind a pay wall. And its caused a reaction upwards into, into in people buying the W, and subscribing to wsj.com. Peter Robinson:So, its working. Rupert Murdoch:Yes. Peter Robinson:Eric Schmidt, CEO of Google, quote: In general, the models that require readers to pay for online content have not worked for general public consumption. So my guess is that for niche and specialist markets it will be possible to charge for online content but I think it is unlikely that you will be able to do it for all the news. So if I were to take Schmidts observation and play devils advocate, Id say, Mr. Murdoch, youre going to be able to pull it off with the Wall Street Journal because that has such a clear brand, and because so many people rely on it for a specific kind of information, financial information. But although it moves me to tears to say so because I so love it, the Post might not work online. And how do you reply to that? Rupert Murdoch:Oh, I disagree totally. Peter Robinson:You do? Rupert Murdoch:Absolutely. I think people. There are certain sections of the Post, particularly, and I think its a very intelligent paper in the way it handles politics, no. But what people like about the Post, I mean, there are groups of people who just, women who live on page six. I cant understand that. But much, much bigger groups of people. Peter Robinson:Page six is the gossip page. Rupert Murdoch:Who recognize that its the best sports paper, and best sports coverage. And theyll buy it. But, you know, they might be buying it at these prices. We might be using paper. We will not be, we wont be using trucks. Peter Robinson:Right. Rupert Murdoch:Itll come out at, on the wi-fi and be picked up on these, on these readers. And well be able to, you know, make a very economic and attractive package to be able to Peter Robinson:Let me ask you a question about that then. So, this stuff isnt expensive print, a newsprint and the distribution. Rupert Murdoch:You bet. Peter Robinson:Five years from now? Ten years from now? When will this cease to be available as a physical object? Do you have a plan in mind or at least a notional number? Rupert Murdoch:No, no Peter Robinson:How long can you afford to carry those. Rupert Murdoch:Well talk about it. (Crosstalk) Peter Robinson: fixed costs. Rupert Murdoch:We think Peter, well be buying papers, and enjoying papers, and the tactile experience of reading. Probably for decades but certainly for one, but at least two. Peter Robinson:All right, all right. Okay. Final couple of questions. Rupert Murdoch:But we have, we will reach a vastly bigger audience. Once you see things like the iPad out there. Peter Robinson:You love the iPad. Thats going to make a difference. Rupert Murdoch:Well, Ive been sold on it because they were up here yesterday with it. But it, and we were all playing with it. And we were all very impressed. Peter Robinson:Okay. Umm, final couple of questions. Rupert Murdoch:Any little. Okay, but therell be so many applications on it that they have, which usually, if you have an iPhone youll be able to starting with it. Peter Robinson:Right. Rupert Murdoch:That a lot of people will go to an application like wheres the best restaurant. Peter Robinson:It will be Rupert Murdoch:The right suburb or wheres this, or that. That youll find, that will eat into the Google search. Peter Robinson:I see. Rupert Murdoch:Which is an interesting sideline to this. Peter Robinson:I see, all right. This year Fox News is expected to brew some $700 million in operating profits. 20th Century Fox, you havent even started to book the profits from Avatar, which apparently is going to be the biggest selling movie in history. Rupert Murdoch:Not necessarily the most profitable, but yes. Peter Robinson:Well, it was an expensive picture to make on the market. Rupert Murdoch:Very expensive picture to make. Very expensive picture to distribute and so on. And, you know, well do, probably $700 million or so in this country, of which. (Crosstalk) Peter Robinson:$700 million net, or gross? Rupert Murdoch:No, no, no, no. Gross. Peter Robinson:Okay, all right. Rupert Murdoch:Of which 60 percent would go to the, through the Fox coffers should we say. Peter Robinson:All right. Rupert Murdoch:And internationally the rest is about 42 percent or something like that. In the case of China its about 15 percent. Peter Robinson:I see. Rupert Murdoch:That thing goes into the pond. We get, we get a distribution fee on the lap. The director gets a a percentage. And then we lay it off to, to be those a risky film. We let a lot of the risk off. Peter Robinson:Dont tell me it would credit default swabs. Rupert Murdoch:No, no, no. But what it means is that we were never in danger of losing my seat. (Crosstalk) Rupert Murdoch:Okay. We run a very conservative studio. But we will do very nicely out of it, dont worry. Peter Robinson:Im Avatar. All right, all right. So television, film. Hugely profitable. And yet everybody who knows you will say that Rupert Murdoch still cares about newspapers. Rupert Murdoch:Sure. Peter Robinson:Why is that? Why did you just say, Oh, lets just carry these. But just lets. All our emphasis on these new, on film and television. These wonderfully profitable new avenues. Rupert Murdoch:Well, Im just a curious citizen. And Id love to know whats going on in the world and be part of it. And its different everyday. And its a, its a great challenge, particularly what I love about a newspaper is, you can always produce a better one the next day or the next edition. Its a constant work whereas, you know, to make a film its often two years of agony. Peter Robinson:Right. Your grandfather was a minister. Your father. Im quoting once again from a Golden Age of Freedom. This is you: I was raised in a newspaper family by a father who believed that newspaper was among the most important instruments of human freedom. My father said that the press must be more than merely free, it must be fact finding, and truth seeking to the limit of human capacity and enterprise. I put it to you that hard boiled businessman though you maybe. At some level youre a missionary. It may drive your investors mad but at some level you feel a missionary impulse. Rupert Murdoch:Thank you. Peter Robinson:Will you let that stand? Or will you Rupert Murdoch:I will let it. I will let that stand Peter Robinson:You will, you will let that stand? Rupert Murdoch:Proudly and I thank you, yes. Peter Robinson:Rupert Murdoch, thank you very much for joining us. Rupert Murdoch:Thank you. Peter Robinson:Rupert Murdoch, founder and chairman of the News Corporation, thank you. Im Peter Robinson for Uncommon Knowledge. Thanks for joining us. Rupert Murdoch Interview Page 1 of 22