...let the speculation begin!
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Let me start by saying that I have no direct knowledge of Mr. Murdoch’s reasoning and I am offering my own opinions. That said, let the speculation begin!
Much of Murdoch’s News Corporation holdings are traditional print and broadcast media whose profitability are largely dependent on advertising. Although broadcast advertising is doing OK, advertising revenue growth in the print sector is just not happening --- for Murdoch or anyone else. Revenues for most print media advertising are flat or declining in real terms. However, Internet advertising is growing --- and growing fast! I have seen estimates of 60-85% growth in the next 2 years for US markets.
Much of Murdoch’s News Corporation holdings are traditional print and broadcast media whose profitability are largely dependent on advertising. Although broadcast advertising is doing OK, advertising revenue growth in the print sector is just not happening --- for Murdoch or anyone else. Revenues for most print media advertising are flat or declining in real terms. However, Internet advertising is growing --- and growing fast! I have seen estimates of 60-85% growth in the next 2 years for US markets.
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With 2007 U.S. Internet advertising approaching $21 billion, that is a lot of real dollar growth. Most of that growth will be at the expense of traditional advertising media --- especially print. Since Murdoch operates globally, the US market is just a fraction of the growth he perceives in this new venue and it is a huge challenge to his existing revenue stream.
First is WSJ.com, one of the few successful subscription Internet publications
First is WSJ.com, one of the few successful subscription Internet publications
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In short, Murdoch must capture a share of that growth to offset declines in print advertising revenues. Dow Jones has, buried in all the WSJ and other print media, some golden Internet assets. First is WSJ.com, one of the few successful subscription Internet publications. Its success led to a subscription model for Barrons.com. Next, consider Marketwatch.com, a consumer investor portal with over 6 million daily visitors. Dow Jones online revenues are growing at a healthy clip, too.
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Depending on how you do the accounting, the growth is a healthy 15% (diluted) or an impressive 26% (year to year). DJ is also well into a significant redesign of the WSJ for the “digital age”. This initiative was started in 2005 and the initial launch was in January 2007. The redesign included new web friendly press width for the print edition, improved content, better organization/navigation, and tighter integration to the online version.
Dow Jones is going to approach $400 million in “online” revenue for 2007...
Dow Jones is going to approach $400 million in “online” revenue for 2007...
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All in all, Dow Jones is going to approach $400 million in “online” revenue for 2007, about 20% of its total revenue. That’s a remarkable percentage for a major US company. Murdoch likely foresees that achievement and is betting he is getting some infrastructure, talent, and ideas that can help News Corporation achieve growth in the online arena.
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In addition, I believe Murdoch is seriously investing in the social experiment we call the Internet. His acquisition of MySpace.com, the 5.6 billion dollar bet on DJ, and his other recent investments point to a serious attempt to change News Corporation into a Web 2.0 (and 3.0) enabled 21st century powerhouse. I think he is doing it, and very competently, too.
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