Please ensure Javascript is enabled for purposes of website accessibility

Rupert Murdoch Is Four Times Stupid

By Rich Smith – Updated Apr 5, 2017 at 5:06PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

WSJ.com will officially be free to all comers.

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 WSJ.com 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 WSJ.com's newfound "free"-dom as being "(semi-)official." But this time, it's for real.

According to CNBC, WSJ.com 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 [WSJ.com] 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 WSJ.com's value is, Murdoch will devalue the brand.
  • Synergy: Charging for both WSJ.com 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 WSJ.com 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.

Time Warner is a Motley Fool Stock Advisor recommendation. You can check out the newsletter with a 30-day, free trial -- no strings attached.

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Twenty-First Century Fox, Inc. Stock Quote
Twenty-First Century Fox, Inc.
FOX
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$98.74 (-1.40%) $-1.40
Time Warner Inc. Stock Quote
Time Warner Inc.
TWX
The New York Times Company Stock Quote
The New York Times Company
NYT
$27.97 (-2.58%) $0.74
Pearson plc Stock Quote
Pearson plc
PSO
$9.34 (-5.18%) $0.51

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.