Rupert Murdoch Is Four Times Stupid

This time, it's officially official.

Last month, in an article called "Rupert Murdoch Is Thrice Stupid," I argued that News Corp. (NYSE: NWS  ) head Rupert Murdoch's long-rumored decision to make free of charge was, shall we say, ill-considered. (One irate reader criticized my use of the "S" word in reference to Mr. Murdoch. Imagine -- criticized for using an over-the-top headline to describe the father of yellow journalism -- the irony is too rich. But I digress.)

At the time, all we had to confirm the news was a short item in The Washington Post. Hence, I described's newfound "free"-dom as being "(semi-)official." But this time, it's for real.

According to CNBC, will indeed follow in the footsteps of The New York Times (NYSE: NYT  ) and Pearson's (NYSE: PSO  ) Financial Times. Murdoch announced at a meeting of News Corp. shareholders Tuesday: "We ... expect to make [] free, and instead of having 1 million [subscribers], having at least 10 [million to] 15 million in every corner of the earth."

Verbosity is not a virtue
I won't go into great detail here repeating my arguments against the wisdom of Murdoch's decision to join the online journalism free-for-all. Basically, they boil down to:

  • Brand: People believe that "you get what you pay for." By removing the price tag that tells people what's value is, Murdoch will devalue the brand.
  • Synergy: Charging for both and The Wall Street Journal proper allowed News Corp. to offer two-for-one pricing deals, using one medium to help sell the other. Making free continues the two-for-one tradition -- except that now, it's going to be "two-for-free," as the Journal's paying subscribers migrate to the free website.
  • Timing: Google (Nasdaq: GOOG  ) , ValueClick (Nasdaq: VCLK  ) , and Time Warner's (NYSE: TWX  ) AOL had it pretty good for a while, capitalizing on a bull market for online advertising. But as fellow Fool Rick Munarriz recently pointed out, the "surge in ad revenue" that AOL has been chasing is proving elusive of late. This market may have peaked already.

On that last point, I want to add one last observation. At the shareholders' meeting, Murdoch warned that although the subprime mortgage crisis has not yet hurt advertising revenue at News Corp., "you are going to see quite a few more shocks, particularly in Europe, and they are going to spread around the world." So explain to me -- why exactly is now the right time to eschew predictable, recurring subscription revenue in favor of advertising revenue that's about to get "shocked"?

Maybe "stupid" is too strong a word to describe this plan, but "smart" doesn't quite work, either.

Read/Post Comments (0) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 540266, ~/Articles/ArticleHandler.aspx, 10/20/2016 5:51:34 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,162.35 -40.27 -0.22%
S&P 500 2,141.34 -2.95 -0.14%
NASD 5,241.83 -4.58 -0.09%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/20/2016 4:00 PM
FOX $25.36 Up +0.04 +0.16%
Twenty-First Centu… CAPS Rating: ***
CNVR.DL $0.00 Down +0.00 +0.00%
Conversant CAPS Rating: *****
GOOGL $821.63 Down -5.46 -0.66%
Alphabet (A shares… CAPS Rating: *****
NYT $11.55 Down +0.00 +0.00%
The New York Times CAPS Rating: **
PSO $9.39 Up +0.06 +0.64%
Pearson CAPS Rating: **
TWX $82.99 Up +3.75 +4.73%
Time Warner CAPS Rating: ***