Given all the news — most of it bad — that News Corp announced yesterday, Rupert’s bombshell sure looked like a ploy to change the topic. And that he did: few were talking about News Corp’s revenue dropping 10+%, or a fiscal 4th-quarter net loss of $203M attributed largely to writedowns at MySpace and lousy advertising revenue., or even that profits from the parent company of Fox movies/ TV beat market expectations by a penny. Nah, everyone was nattering instead about Murdoch’s pronouncement on the earnings call that News Corp plans to charge for content on allthe company’s news sites. ““The tumultuous and unprecedented change affecting the entire media sector, particularly at newspapers and broadcasters, cannot be ignored. The digital revolution has opened many new models of distribution, but it has not made content free,” Rupe said. “Quality journalism is not cheap, and an industry that gives away its content is simply cannibalizing its ability to produce good reporting.” The salvo was lobbed: Murdoch is back on the attack. While other news content companies continuously declare “woe is us” and merely talk about what steps to take to stop their financial hemorrhaging, his News Corp plans to act boldly. I have no doubt that others will take cover behind him and follow the leader.
Coinciding with this is the news that 20th Century Fox has instructed DVD distributors to withhold new releases from vending-machine operators including Coinstar’s Redbox kiosks for 30 days. Many media companies like Universal are opposed to the $1 price of Redbox rentals unless there’s a 45-day window, and that has already sparked a lawsuit. But News Corp’s newly minted No. 2 Chase Carey took on the issue in a conference call yesterday, attacking the $1 price has “grossly undervaluing” Fox’s product. Now there’s a statement: “Fox supports the vending-machine business in a 30-day window following our initial home-video street date. We invest enormous money, creativity and effort to make entertaining, high-quality Fox movies available throughout the world.” Who has decided to cooperate with RedBox? Sony Pictures, which recently made a deal for $460M over 5 years to supply its DVDs. But, again, News Corp’s strong opposition will allow other companies to follow the leader.