Rupert Murdoch, like most media moguls, craves two things: money and influence.
What is so fascinating about last week’s proposed sale of Fox to Disney is that it demonstrates how much he values one over the other. Of course, this is not a deal that will make him any poorer – the Disney offer is strong, and Murdoch and other Fox shareholders will end up with an estimated 25% of one of the world’s largest media organisations – but this is a deal which sees him giving up a lot of control over profitable businesses, whilst retaining almost all his political influence.
As part of the deal, he is selling the Fox stakes in Sky and Sky News, despite fighting so hard to gain full control of the business. Even if Sky News is a loss-leader, Sky itself is extremely lucrative for Murdoch, earning him and his fellow Fox shareholders around £500m each year. But the deal does not include his News Corp assets or his UK newspaper business, which made a £60m loss last year.
In the US, he is selling his interests in 21st Century Fox, but retaining Fox News. While this is understandable from Disney’s perspective – they would not want to be associated with a rabid right-wing news channel – the business motive is less clear. In the reverse of his UK position, Murdoch is selling his unprofitable film interests while retaining his profitable news channel.
The truth is that Sky News never held the influence that Murdoch had hoped. While he loathes the hegemonic influence of the BBC, Sky News was never truly able to challenge the state broadcaster – or, for that matter, its commercial rival ITV. BBC TV bulletins regularly pull in ten times as many viewers as Sky News, with ITV comfortably reaching five times as many. Moreover, broadcast news in the UK is a highly regulated environment, where balance and temperance is non-negotiable. It is tricky for a news channel to be highly influential in such circumstances.
On the other hand, Murdoch’s loss-making newspapers are hugely influential. The Sun and The Times are perfectly aligned to appeal to very different but very powerful demographics: and while it may be hyperbole to claim that they have won elections single-handedly, they have proved very adept at backing the right side at crucial times. They are courted by politicians of left and right, and so, by extension, is their owner.
His Fox News network has similar influence in the US. Indeed, it was reported last week that Donald Trump called Murdoch to ensure that Fox News was not part of the Fox divestment. Its unique brand of fact-lite reporting and unhinged polemic thrives in the US’s unregulated broadcast market, and was considered a key player in Trump’s election victory.
News Corp also retains substantial – and influential – media interests in Australia, including over 100 local newspapers, the Australian News Channel (which owns Sky News Australia), and three of the country’s top five newspapers.
So while the potential $66bn deal may be considered by some to be a backward step for Rupert Murdoch, it will allow him to concentrate on his favourite pastime: international kingmaker.
Martin Tripp Associates is a London-based executive search consultancy. While we are best-known for our work in the TMT (technology, media, and telecoms) space, we have also worked with some of the world’s biggest brands on challenging senior positions. Feel free to contact us to discuss any of the issues raised in this blog.