Rupert Murdoch / Time Warner Merger? So? Murdoch’s Lost His Touch

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DAVOS WEF 2009The potential Rupert Murdoch / Time Warner Merger has some observers and media executives really worried. Over at her blog, the legendary Nikke Finke writes:

 

Merging their significant distribution infrastructures — for international box office, home video distribution, and/or digital distribution — would create both revenue and cost synergies for their outsized businesses. That’s good for the companies. Merge their movie and TV production studios who are now bitter rivals looking to sign the best talent, and suddenly directors and writers and actors and showrunners can’t play off the two companies against each other for bigger deals. That’s bad for you.

Meg James and Daniel Miller over at The LA Times’ claim:

If the two companies were to combine, Fox would control the output of more than a third of all scripted shows on the major broadcast networks…20th Century Fox Television studio, which produces such hits as “Modern Family” and “Family Guy” is currently producing 20 prime-time shows for the major networks. Warner Bros., traditionally the most profitable TV studio with such hits as “Big Bang Theory,” is producing 28 prime-time shows for the upcoming season.

There’s a weird obsession with control of organization over establishing a competent media strategy in the media industry today, particularly among large brands like News Corporation, Hearst Corporation, and The New York Times. Rupert Murdoch getting his famous hands on Time Warner will not magically solve its problems in trying to successfully decipher how to profitably integrate its multimedia presence. And nothing Rupert Murdoch has done indicates he has the answer, and I really don’t think he does.

The fact is, owning onto itself is seen as the all mighty medicine against falling per-property television and movie revenues. It’s also a kind of lean-to supporting the jobs of executives put in charge of trying to determine how to better monetize Internet activities. In the end, they just give up, feed dollars to lawyers and interns, and ask them to spot copyright infringement issues, even if they’re totally wrong in what they see much of the time.

So let Rupert Murdoch buy Time Warner, but force him to pay a sum that’s just plain wrong, but not so high he can’t do it. Let’s see how Rupert does with the new acquistion – I can tell you now, it will fail. He’ll wind up spinning off part after part, and sacking person after person until he’s whittled the whole down into a more profitable result that really does nothing to change the economics of entertainment.

Murdoch has lost his touch, and he did so way back when The Daily was the apple of his eye. I told him via Twitter and this video that The Daily was going to fail. I wrote: I was asked to give my take of the new publication The Daily for The Apple iPad, the result of a partnership between Apple’s Steve Jobs and Rupert Murdoch of News Corporation. It’s an exciting new development in news media but I don’t think it’s going to last in its current form. There are some problems. First, people need an iPad to get it. Second, they have to pay $39 to keep it past two weeks. Also, The Daily lacks a diverse staff – the photo showing the people behind The Daily reveals mostly white men – readers want more people of color. The fact is news is consumed as much by what the people look like as the content. In fact that’s part of the content. A diverse staff says the publications “hip,” cool,” and “modern.” That’s not the message The Daily sends.

Two years later after The Daily launched, it was shut down. I was right. Murdoch said in a statement: “From its launch, The Daily was a bold experiment in digital publishing,” “Unfortunately, our experience was that we could not find a large enough audience quickly enough to convince us the business model was sustainable in the long term.”

The Daily also failed because it’s creators assumed the standard edict “If you build it, they will come” worked for a news app. Only blind arrogance supports such an idea in the Internet age, and that’s what The Daily was plagued with having among its creators. Because The Daily‘s content was not Internet-based, it could not take advantage of modern search engine optimization practices to attract news readers. Thus, it was trapped within the iPad environment, with no way to organically expand out to gain a larger audience.

It’s digital media failures like The Daily that have me question Murdoch’s ability to exact change in media economics enough to counter the forces conspiring to wreck the very institutions he acquires. If Murdoch gains Time Warner, observers believe he will move to dump CNN. But ask the question: what part of CNN? CNN’s really eight networks, including HLN and CNN International. The reality is they occupy the same space in CNN Headquaters in Atlanta, and in one management incarnation shared the same programs: at one point, CNN’s iReport was used not just by CNN but by HLN. Dumping CNN without understanding what’s being let go, let alone having a large plan to reorient what’s owned rather than doing so, is just plain nuts.

But then, Rupert is only trying to quickly squeeze money out of what he’s got, and if the price to get what he wants in Time Warner is really high, selling off assets is going to be his next large move after he gets what he wants. The action will change nothing.

Google Buying Time Warner Is The Real Answer

Rupert Murdoch’s better off trying to angle and get Google involved. What Google has, in YouTube, is a ready-made super-distribution system that could be nicely meshed with Time Warner’s cable service and discover content synergies only dreamed about. Brand advertisers would be in for a real value-increasing treat. I can’t see Murdoch coming close to what’s capable for Google in this case. I just can’t see it.

Stay tuned.

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