Rupert Murdoch: Creating a global media empire

THE BALTIMORE SUN

Having stirred the television industry and left it thoroughly shaken, Rupert Murdoch, his demeanor as dry as a James Bond martini, sat in his office on the lot of his Twentieth Century Fox studio this week and declared himself "totally amazed" at what he had wrought.

The Fox chairman, who engineered the most devastating act of station piracy in the history of American broadcasting -- the switch of 12 stations from the big three networks to his upstart fourth network, the Fox Broadcasting Co. -- said he never expected the reverberations that rolled through the networks and local stations last week.

"It's a very nice deal for Fox to expand its audience, and to expand its credibility with advertisers," Mr. Murdoch said, his elastic, expressive face slowly unfolding into a grin of Cheshire cat proportions. "And I thought that was the end of it."

The end is hardly in sight. As Mr. Murdoch's competitors sort through the repercussions, hoping, as one senior CBS executive put it, "that this guy has finally run out of money," the Fox chairman, like any other breed of predator, declared himself ready to move on to the next killing.

"I think we'll get another six or eight affiliates by Christmas," he said. And down the road, he added, are other plans for Fox, including:

* Further strengthening of its station lineup until Fox, which Mr. Murdoch said is now "70 percent of the way to being a full network," reaches parity with ABC, CBS and NBC.

* More sports programming, including perhaps major-league baseball and the Summer Olympics in 2000 (which will be based in Mr. Murdoch's native Australia), to complement the National Football League package that Fox wrenched away from CBS by making a huge bid.

* Most important, in Mr. Murdoch's view, the creation of a Fox news division that will be the first step toward establishing an international news service to compete with CNN.

All these plans fit into a grand overall design for a truly global media empire. Although the parts include important media holdings like TV Guide magazine, HarperCollins publishing, British Sky Television and Star TV in Asia, and although the bases of the empire stretch from New York to London, Hong Kong and Australia, Mr. Murdoch has centered his gigantic operation in Hollywood since he began the Fox network here in 1986.

His suite in the executive office building, set in the middle of the sprawling Fox lot, retains the flavor of Hollywood-mogul style: white paint everywhere, ornate designs on doors and window frames and California sunlight streaming through the palm trees outside the first-floor windows. The suite has the feel of a traditional Hollywood bungalow office even though it is part of a much larger office building.

But the signs of empire-building are there as well: the wall clocks giving the time in London, Hong Kong and Sydney; the built-in, carved-wood racks of newspapers and magazines, all Murdoch titles, from the New York Post to the Times of London to the South China Morning Post; the pack of restless young executives backed up in the waiting room.

The 63-year-old Mr. Murdoch, tan and fit enough to verify his extended residency in California, confirms that the Fox network has become the most crucial cog in his larger scheme.

"To have a big, viable network in this country is a central piece of our strategy," he said. "This is where you generate the shows. As we get stronger around the world, we'll make a lot more shows for worldwide distribution. That will certainly happen when we get into news, when we get into broadcasting special events. That's when we'll take worldwide rights and maybe try to do some things simultaneously all over the world."

The ideal scenario, Mr. Murdoch said, would be a completely separate news channel, which could also act as a supplier of news coverage and programs to the existing Fox network. It would not supply an evening newscast, which Mr. Murdoch regards as obsolete, but would instead provide newsmagazine programs and live coverage when the news warranted it.

Mr. Murdoch acknowledged that any Fox news effort is likely to draw skepticism because its main foray in that direction so far is "A Current Affair," which many critics have blamed for lowering the standards of television news.

" 'Current Affair' has been copied and exceeded in many ways," Mr. Murdoch said. "The show did not turn out as I anticipated it would. But that was never intended to be our sole type of 'D presenting news. Look at our news services on our stations in Washington and New York. They're pretty traditional."

The Fox network is so central to Mr. Murdoch's plans that he might be expected to flinch a bit when articles appear in the press, as they did last week, about the Federal Communications Commission investigating whether Fox dissembled in its original filing with the commission in the mid-1980s. The dispute is over the question of whether the company is foreign-owned.

Mr. Murdoch himself became a naturalized United States citizen, as required to own television stations, but virtually all the financing for the purchase of the stations that originally made up the Fox network was supplied by Mr. Murdoch's News Corp., which is an Australian company.

"There's nothing happening with the FCC," Mr. Murdoch said. "It's all propaganda." Among the main propagandist suspects, he said, were his competitors, specifically CBS, whom Mr. Murdoch accused of "being busy on the P.R. front" on this story.

Mr. Murdoch's incendiary deal with New World Communications Group Inc., which agreed to switch the 12 stations over to Fox, has certainly forced CBS and the other networks to get busy in their own backyards. Mr. Murdoch himself said a "frenzy has developed" among the networks to keep their strong affiliates from defecting.

The scramble over affiliates has been intense enough to tame, for now at least, Mr. Murdoch's itchy spending finger. "We had hoped to buy two more stations for ourselves," he said, referring to the fact that the deal Fox made with New World will compel Fox to sell off two stations it now owns.

"But I think we'll have to wait until the frenzy dies down a bit before we buy," he said.

Any hesitation to spend for assets would strike Mr. Murdoch's competitors as stunningly out of character. Using terms like "shell game" and "Ponzi scheme" to describe his rapid-fire spending, executives from the other networks say Mr. Murdoch may be showing signs of desperation because Fox's prime-time ratings have been down two years in a row.

Mr. Murdoch dismissed that notion, saying: "It looks like we lost 14 percent to 16 percent of our audience. But it's not as bad as it looks." He added that of Fox's seven nights of programming each week, "we had two bad nights. We fully expect to get them back and more this year."

There is no question that Mr. Murdoch has been on a spending spree. The Fox chairman spent $1.6 billion over four years for the NFL rights; then followed that by spending $500 million to convince New World to sign with Fox.

Some of his network competitors have suggested that Mr. Murdoch is about to lose his elegantly tailored shirt on what they view as reckless investments. Mr. Murdoch, though, said he sees the New World deal as "not very expensive," because Fox received equity in New World that he regards as "likely to show a very good profit." And he said football will be worth the money Fox loses on it because it will build the Fox profile.

How big a loss will that be? Last year, the entire profit for Fox network was about $80 million. Mr. Murdoch blithely forecasted, "We'll be down to something close to break-even next year, totally because of football."

CBS and NBC executives predict the football losses will be much worse, in excess of $100 million. They also wonder how Mr. Murdoch can so cavalierly shrug off losses like that.

But what others see as reckless, Mr. Murdoch continues to regard as entrepreneurial and visionary.

"You have other companies, sometimes with development offices with 45 or 50 MBAs in them. And you put a good idea to them, and the chief executive says, 'That was a good idea; let me pass it by my experts.' Two months later, 45 people have signed on to negative reports because they don't want to take the risk of putting out a positive report in case they get blamed for it. And then nothing happens."

As Mr. Murdoch continues to demonstrate to the rest of the media industry, at his shop, for better or worse, something almost always happens.

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