Rupert Murdoch’s News Corp third quarter numbers tomorrow are likely to be dominated by what’s happening in the US, where advertising appears to be weakening along with the economy.
But the commentary will be dominated by Rupert’s views on life and the universe, especially the internet after his big speech at the start of April where he confessed, on behalf of all media executives, to have got the internet wrong.
As business mea culpas go, it was a strong one. Rupe of course had a brief fling with the net in the late 90s and earlier this decade: the cost was probably a couple of billion dollars in lost investment, lost opportunities and losses on selling written-down assets. That was driven in part by son Lachlan’s learning curve, part of which came from associating with various nerds and netheads here and in the US. One of those was a chap called James Packer, who suddenly developed an understanding of things tech, telco and net. Remember OneTel.
But young James’s conversion to things net saw the floating of ecorp, that wild child that at one stage was capitalised at billions for virtually nothing. These days it’s a buried memory at PBL.
But one of those people running ecorp and whispering in James’s ear was a youngster named Jeremy Phillips. He was a good talker, coming from McKinseys, and James and some gullible types in the market swallowed the spin.
At one stage Jeremy’s ecorp options and shares were worth more than $150 million. For a chap in his late 20s they were heady times, but as the techs crashed and nets sprung a leak, ecorp sagged and Jeremy and his chairman (Daniel Petre, formely of Microsoft) departed.
Jeremy went overseas and re-invented himself, working at Citigroup in strategy and then popped up at – guess where – late last year?
If you answered News Corp, you win the prize. He’s a strategy boffin for Rupert and those who knew him at PBL and ecorp say Rupe’s now famous speech on the internet has Phillips’s ideas throughout it. The lad’s a believer and will remain a believer – but does he really understand his master?
Whenever Rupert talks the talk (remember the now famous mid 90s conversion to things technology by Rupe that saw Sky satellites and a manner of other things grasped) he usually means how can I make money.
Estimates in the US say that in the next couple of years the ad revenues of Google and Yahoo could pass that of the free-to-air TV networks, including Rupe’s Fox. That’s what’s behind Rupert’s conversion to the internet. At the moment Google, Yahoo and others are taking money from Rupe’s newspapers, magazines and TV businesses.
So when the Rupster rattles on tomorrow about the internet, he will be really talking about money, not readers or viewers.