With newspapers cutting back, and predictions of even worse times ahead, Rupert Murdoch said the profession may still have a bright future, if it can shake free of reporters and editors who he said have forfeited the trust and loyalty of their readers.
"My summary of the way some of the established media has responded to the Internet is this: It's not newspapers that might become obsolete. It's some of the editors, reporters, and proprietors who are forgetting a newspaper's most precious asset: the bond with its readers," said Murdoch, the chairman and chief executive of News Corp. He made his remarks as part of a lecture series sponsored by the Australian Broadcast Corporation.
Murdoch to journalists: Shape up or risk extinction
(Credit: Dan Farber/CNET Networks)Murdoch, whose company's holdings also include MySpace and The Wall Street Journal, criticized what he described as a culture of "complacency and condescension" in some newsrooms.
"The complacency stems from having enjoyed a monopoly--and now finding they have to compete for an audience they once took for granted. The condescension that many show their readers is an even bigger problem. It takes no special genius to point out that if you are contemptuous of your customers, you are going to have a hard time getting them to buy your product. Newspapers are no exception."
The 77-year-old Murdoch, recalling a long career in newspapers that began when his father's death forced him to take over the Adelaide News in 1952, said the profession has failed to creatively respond to changes wrought by technology.
"It used to be that a handful of editors could decide what was news--and what was not. They acted as sort of demigods. If they ran a story, it became news. If they ignored an event, it never happened," Murdoch said. "Today, editors are losing this power. The Internet, for example, provides access to thousands of new sources that cover things an editor might ignore. And if you aren't satisfied with that, you can start up your own blog, and cover and comment on the news yourself. Journalists like to think of themselves as watchdogs, but they haven't always responded well when the public calls them to account."
To make his point, Murdoch criticized the media reaction after bloggers debunked a 60 Minutes report by former CBS anchor Dan Rather that President Bush had evaded service during his days in the National Guard.
"Far from celebrating this citizen journalism, the establishment media reacted defensively," Murdoch said. "During an appearance on Fox News, a CBS executive attacked the bloggers in a statement that will go down in the annals of arrogance. 60 Minutes, he said, was a professional organization with 'multiple layers of checks and balances.' By contrast, he dismissed the blogger as 'a guy sitting in his living room in his pajamas writing.' Eventually, it was the guys sitting in their pajamas who forced Rather and his producer to resign."
Murdoch continued: "Mr. Rather and his defenders are not alone. A recent American study reported that many editors and reporters simply do not trust their readers to make good decisions. Let's be clear about what this means. This is a polite way of saying that these editors and reporters think their readers are too stupid to think for themselves."
Murdoch's comments come at a time when the media landscape looks increasingly bleak both for print-based and online news organizations. A recent report by Goldman Sachs predicted that advertising pressure will continue because of the declines in the auto and financial industries. Online outlets are also feeling the impact. On Friday, TheStreet.com shut its San Francisco office.
Despite the blemishes, however, Murdoch said newspapers can still count on circulation gains "if papers provide readers with news they can trust." He added that they will also need to embrace technology advances like RSS feeds and targeted e-mails. The challenge, according to Murdoch, will be to "use a newspaper's brand while allowing readers to personalize the news for themselves-and then deliver it in the ways that they want."
Murdoch concludes that "the newspaper, or a very close electronic cousin, will always be around. It may not be thrown on your front doorstep the way it is today. But the thud it makes as it lands will continue to echo around society and the world."
Barring a come to Jesus moment by both sides, "Microhoo" is dead and buried. So who won and who lost? Months from now, we'll have a clear idea. In the meantime, here are my back-of-the-envelope picks.
Biggest winners: Steve Ballmer and Microsoft
A lot has been made of Microsoft's seeming inability to engineer its way out of a paper bag. Trouble with the conventional wisdom is that it's usually out of date. Prior to Ray Ozzie coming onboard and Microsoft's move to embrace cloud computing in a big way, Yahoo may have been worth nearly any price.
Jerry Yang is a girly-man--and that goes double for Eric Schmidt.
Not now. Besides, why buy trouble? By walking away from a protracted proxy contest, Ballmer saved billions buying a company which would have existed in name only. Too many malcontented Yahoo employees would have walked out the door. What's more, the cost of integrating the companies would have been a cluster bomb. Now Microsoft can dip into that big war chest and selectively buy any number of Web 2.0-ish companies to complement its bigger strategic ambitions.
Biggest losers: Jerry Yang and Yahoo
When Wall Street opens on Monday morning, I wouldn't want to be holding shares of Yahoo. After the company effectively put the kibosh on what would have been a 70 percent premium, investors are going to have a fit. In his letter, Ballmer said Microsoft was going to raise its offer to $33 a share, or another $5 billion, but the deal fell apart because Yahoo wanted even more.
I've got a plan. Really. I do.
I'm anxious to hear Yahoo's side of the story, but the spotlight's on Yang to convince outsiders that he held out for all the right reasons and not because of personal animus toward either Ballmer or Microsoft. Perhaps he thinks he can inveigle Rupert Murdoch and News Corp. or that the Google connection will work out to Yahoo's bigger benefit. Tough to say what's going through his head these days. Yang has remained incommunicado during the course of the entire novella. Perhaps he believes this clears the decks for the "rewiring" of Yahoo previewed by the company's CTO last month at the Web 2.0 conference. Maybe it does in the long term, but Yang doesn't have two years to muck around. He's got to produce a turnaround now.
Eric Schmidt and Google: Moderate losers
It's as simple as a zero-sum game. Whatever hurts Microsoft benefits Google. And vice-versa. The conventional thinking is that the Microhoo combo would have presented Google with a potent threat. I don't buy that line.
Sergey, Larry, and I quite enjoy Steve's Monkeyboy routine
On paper, a Microsoft-Yahoo merger looked formidable. In practice, however, it was rife with potential for a major culture clash. Management would have been bogged down for months trying to figure out how to get all the high-strung boys and girls on both teams to play nice. Google would have continued to feed its juggernaut, snickering all the while at "Micro-molasses." Now Ballmer's going to be in a frenzy to get Microsoft back in the game. Google would have fared better if Microsoft had to focus on making a Yahoo merger work.
Rupert et al: Moderate winners
Round and round they go. Maybe Murdoch or the folks at Time Warner (AOL) still hanker after Yahoo. If so, they may yet get another chance to twirl. During the last couple of months every scenario was on the table. Here's another: if Yahoo's stock fails to recover, Yang doesn't have any wiggle room. Without immediate improvement in the stock price, management may be amenable to a combination between Yahoo and one of its erstwhile suitors.
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