The Murdochs' Scheme for Your Newspapers

Andrew Parsons / AP Photo If James Murdoch's bold plan for his family's newspapers takes hold, he could save an industry—and cement his place as father Rupert's heir apparent.

London’s media elites—at least those who don’t work for him—have long loved to hate Rupert Murdoch. Isn’t it strange, then, that his 36-year-old son James should emerge as a champion of the newspaper industry?

Not really. “Rupert Murdoch is the best newspaper owner in the world,” says Roy Greenslade, a professor of journalism at City University in London and a former editor of the Daily Mirror (not a Murdoch paper). “He loves newspapers—and he understands how they work.” James may be a chip off the much-maligned block. “People say he doesn’t love newspapers as much as his father,” says Greenslade. “There’s just no evidence that that’s true.”

Indeed, the evidence so far points in the other direction. As the London-based CEO of News Corporation’s Asian and European operations since late 2007, James Murdoch runs Britain’s largest newspaper group, News International. Its four big titles—the Times, the Sunday Times, the Sun, and the News of the World—have a total circulation of nearly 8 million copies in a country of 60 million. Much like in the U.S., British papers have seen dramatic newsroom bloodlettings, but when it was News International’s turn in February, they cut just 65 editorial jobs across the four papers, compared with deep slashes—1 in every 4.5 jobs—on the commercial side. Murdoch’s message was clear: We’re betting on journalism.

James Murdoch’s battle plan: Whenever the newspaper shakeout ends, News International’s competitors will either be out of business or, having cut staff drastically, substantially weaker. Having protected his editorial assets, Murdoch’s titles will be in a position to attract people who still want to read.

That move raised eyebrows. The newspaper business in Britain has not been ravaged in the way it has been in the U.S., but it’s likely to get worse as advertising craters and the economy, lagging behind that of the United States, sinks deeper into recession. In America, Rupert Murdoch’s affection for print has cost him dearly. Earlier this year, News Corp. took $8.4 billion in writedowns, including $3 billion on its newspaper unit. That includes Dow Jones & Company, publisher of The Wall Street Journal, which Murdoch bought in 2007. The price that Murdoch paid for Dow Jones, over $5 billion, looks awfully high in hindsight.

This turbulence hasn’t stopped James from pushing his father’s longtime print strategy—the “last man standing,” as a former editor at a Murdoch paper calls it. The enemy of a successful newspaper is not the other papers, according to the thesis, but people who don’t want to read. James Murdoch’s battle plan: Whenever the newspaper shakeout ends, News International’s competitors will either be out of business or, having cut staff drastically, substantially weaker. Having protected his editorial assets, Murdoch’s titles will be in a position to attract people who still want to read.

“You have to love a challenge, don’t you?” Murdoch told an audience at the Monaco Media Forum last year. Despite the wreckage around his industry, Murdoch believes newspapers can adapt and thrive. “I actually think the newspaper business is one of the great opportunities for innovation in modern media,” he said in Monaco.

Britain is an able proving ground for Murdoch’s line of attack. The British newspaper industry is hardly immune to what is, with a few exceptions, a global crisis. Greenslade estimates that more than 50 regional newspapers in Britain have gone under over the past year. Of the 20 or so daily and Sunday national newspapers in the United Kingdom, a small number are under real threat and could fail in the next year.