MediaWeek (Vol 5, No14): Frontline Video on NI Hacking, Blackboard Thinking, Taking the SAT (again), Book Awards + more

Frontline on PBS has spent an hour looking at how the Murdoch/News International phone hacking scandal has evolved from the start.  As you watch this just remember that The Guardian did not get newspaper of the year in the UK this year.  (Frontline);

Watch Murdoch's Scandal on PBS. See more from FRONTLINE.

People are still digesting the news about Blackboard's acquisition of Moodle.  Here is an interesting view from Audrey Watters at Inside Higher Ed.  I happen to agree that LMS providers could gain access to very significant data that many in the education supply chain would find useful and worth paying for (IHEd):

But I think the value's elsewhere. Or rather the value is in the customer, but not in terms of licenses or sign-ups or enrollment numbers per se. I think the value's in the data:
What are students reading? What are they buying at the bookstore? What are they checking out of the library? How much time are they spending on course materials? How often do they interact with other students? What does that interaction entail? How often do they interact with faculty? What does that interaction entail? How do students respond to feedback? How's attendance? How are grades -- not just at the end of the term, but in an ongoing and real-time basis? What classes do students want to take? What classes should they take? What classes should the university offer? Can it build a recommendation engine to help make suggestions to students? What faculty should it hire? And what are those faculty doing?
These are the sorts of questions that big data promises to answer for universities, as well as (I'd hope) for leaners. That's both a frightening and a thrilling prospect, I think, when we consider its implications. But learning analytics is still a largely open field right now, I'd say, even though there are pockets of early incumbants: companies who've built adaptive engines, companies who hold massive amounts of user data, companies who sell products and services to universities/professors/students.

Ever think of taking the SAT over again? Me either, but Drew Magary at Deadspin thought he would give it a try and hilarity ensues.  Parents, this is what you are putting your kids through. (Deadspin)

I mean seriously, HOLY FUCK. My mind exploded when I looked at this. You may as well have asked me to climb Everest using a fork. It took me five minutes just to try to understand the QUESTION. Once I had figured it out, time was up. I finished most of the verbal sections of the test under the time allotted. I had no such luck with the math sections. Even when I got the question right, the mental strain it took to try and dig through the piles of shit-encrusted mildew in my brain to retrieve the information needed to solve any given equation was brutal. How do you divide fractions again? Don't you flip the top number and the bottom number or something? And what's the top number called? The Ruminator? The Kilometer? OH FUCK IT.
Many times, I had to skip a question because I couldn't figure out the answer, and then I got that paranoia that's unique to someone taking a standardized test. I became fearful that I had failed to skip over the question on my answer sheet. So every five seconds, I'd double-check my sheet to make sure I didn't fill out my answers in the wrong slots. One time I did this, and so I had to erase the answers and move them all forward. Only I had a shitty eraser, which failed to erase my mark and instead smeared the mark all over the rest of my sheet. FUCK YOU, TRICK ERASER. I HATE YOU.

This year's Booker came under fire for being too low brow and this post on a scifi award shows that complaining about book award efforts is alive and well, but that hasn't stopped the Observer from launching a new award program to name the best book from 1962.  Why? Well, just because it was 50 years ago which I don't need reminding (Observer).

The Observer is sponsoring a new annual prize to decide which book of ideas from the crop published 50 years ago has had the most lasting influence on society's thinking. So, taking the class of 1962, the Bristol festival's Best Book of Ideas prize will come from this shortlist of 10:
1) Another Country James Baldwin
2) Capitalism and Freedom Milton Friedman
3) A Clockwork Orange Anthony Burgess
4) Day (originally published as The Accident) Elie Wiesel
5) My Land and My People: The Original Autobiography of His Holiness the Dalai Lama of Tibet Dalai Lama XIV
6) The Other America Michael Harrington
7) Sex and the Single Girl Helen Gurley Brown
8) Silent Spring Rachel Carson
9) The Structure of Scientific Revolutions Thomas S Kuhn
10) Toward a Psychology of Being Abraham Harold Maslow

The winner, chosen by the festival board, will be announced on 21 May.

Speaking of which, Christopher Hitchens is one of 18 authors selected for the Orwell Prize for political writing.(Telegraph)

From Twitter:

Blackboard's Open Source Pivot | Inside Higher Ed: InsideHigherEd No one really knows what to make of it.

Presentation from BlackBoard User meeting on important trends impacting Higher Ed Catalano 

Great Potter round-up from Porter Anderson JaneFriedman

Bertelsmann Weighs I.P.O. For Expansion NYTimes

BBC News - Amazon boss Jeff Bezos 'finds Apollo 11 Moon engines' BBCNews And they weren't in his warehouse.

UK Publishers Assoc Outraged It Wasn't Consulted Ahead Of The Public Over Open Access To Publicly-Funded Research Techdirt

Brands to Publish - Repost

It's Friday which means another regurgitation from several years back. This one originally published on January 13, 2007:

Nancy Drew has always held a fascination for me, not because I clamor for a good girlie mystery but because of how The Nancy Drew series evolved. Established by Edward Stratemeyer, The Drew books were written by a number of ‘house’ writers (Mildred Benson) and the books were never dependent upon one author for their success. While the publisher of the titles was little recognized, the Drew series grew to become a strong branded product line and, as such, represents a model today's publishers may want to emulate. Corporate branding exercises little impact in the publishing world: We all know this and, while some publishers have tried to create brand strength (i.e., Paramount Publishing), success has been sparse and probably – in truth - not aggressively sought after.

There are exceptions. I used to start my Intro to Publishing courses at Price Waterhouse by asking the group to name a publisher. I stopped doing this when a partner once popped up and said HARLEQUIN! While some consumers might be able to identify Harlequin or Hungry Minds or Fodors, they would be hard-pressed to cite HarperCollins or Simon & Schuster with any relevance. Consumers have little emotive connection with publishing trademarks (a fundamental facet of brand awareness) and publishers are unlikely to ever achieve this connection with consumers. So, in an age in which the author transcends the publisher (Patterson, Grisham, Ludlum, Courtnay) what is a publisher to do? Investing in a branding campaign would be expensive and ultimately pointless, but embarking on a strategy similar to that which produced the Drew books might be more constructive.

My extrapolation of the Drew example led me to wonder why publishers don’t establish their own character-based brands. More publishers will do what Nelson has done and drop imprints, but will they also start to develop their own character-based franchises? Clearly, it is hard to ‘bottle’ what makes John Grisham a popular writer, but there are examples where existing characters have been extended in new ways. For example, there is a cottage industry of TV soap-opera lovers who create stories, novelizations and back-stories for the characters that appear in the TV soap operas. George Macdonald Frasier took a minor character out of Tom Brown’s School Days and created The Flashman series of satirical historical novels. The book packager Alloy Entertainment (which got caught up in a plagiarism charge last year) also operates a Nancy Drew model. There must be many others.

Publishers don’t have to look far to see how powerful character-based publishing could be. The comic book industry has been doing this for 50 years. In this industry the corporate brands (Marvel, DC Comics, etc.) have benefited from some of the reflected brand indentity that characters such as Superman, Spiderman, Aquaman and others have created in the minds and behavior of consumers. In book publishing, the opportunities to create character franchises are there for the asking. James Patterson has embarked on developing an author/character franchise and, if publishers were smart, they would be thinking about creating contracts that gave them the ability to broadly leverage the characters that authors create. This would include (with the author's permission) ghost-written books and stories of both the main characters and development of derivative story lines out of the books (as in the Flashman example). The opportunity to expand the content output and publish to a ‘template’ would generate higher revenues for publisher and author, stable consistent output and content consumers could enjoy.

The above scenario still accords some level of risk for publishers that the ‘powerful’ author may go off on his or her own. Given the examples in the music industry of late, some have suggested that major authors will do what Radiohead has done and walk away from the traditional publishing model. Some may, but it will hardly be an avalanche and this threat is no worse for a publisher than losing an established author to a rival house. The bigger question is how publishers can maintain a consistent funnel of marketable branded content. I believe publishers should be attempting to develop their own proprietary content franchises by building character properties in the same way the Nancy Drew series was created. There are several ways to develop this: Firstly, publishers can simply buy out an authors work so that they own it in total and can leverage it anyway they want. Secondly, they can license characters from other media: Who wouldn’t want to read a hard-boiled procedural featuring Law & Order’s Lennie Brisco, for example? As publishers begin to travel down this road, they could evolve into character based enterprises similar to Disney and Marvel. This, in turn, would make them less susceptible to the whims of authors and the corresponding limitations of their contracts.

Harpercollins is owned by NewsCorp which owns Fox. Assume that Fox owns the character "Dr. House"; why don’t you see a series of House mysteries written to a formula by ‘house’ (sorry) authors whose job it is to churn these out every two weeks? And there is no need to limit the books to Dr House; any of the characters in the show should be fair game. Publishers who focus on their publishing brands have things backwards: They should see things from the consumer's point of view and that view is more than likely focused on either an author or a character. Build the product pipeline up with a character based publishing approach and the publisher may grow in the ascendancy.

Obviously, authors are a critical component to a publishing house’s viability but as distribution flattens, barriers to entry drop and generally the industry changes. Publishers need to reassess their content-acquisition strategies to ensure they have access to revenue-producing assets that will remain with them for an extended period of time. Perhaps the Drew model will become more widespread.

MediaWeek (Vol 2, No 45): Money Issue

Several publishers reported earnings this week.

Simon & Schuster (CBS)

Publishing revenues for the third quarter of 2009 increased 2% to $230.4 million from $225.0 million for the same prior-year period reflecting the timing of the release of titles. Best-selling titles in the third quarter of 2009 included Arguing with Idiots by Glenn Beck and Her Fearful Symmetry by Audrey Niffenegger. In constant dollars, Publishing revenues increased 4% over the same prior-year period.

OIBDA for the third quarter of 2009 increased 10% to $28.4 million from $25.8 million for the same quarter last year and operating income increased 14% to $26.6 million from $23.4 million for the same prior-year period primarily due to revenue growth, partially offset by higher write-offs of advances for author royalties.

Hachette (Reuters) and The Bookseller:

Publishing revenues for the nine months to end September 2009 were €1,694m, up 8.3% on a reported basis and 8.8% on a like-for-like basis. Sales grew again in the third quarter of 2009, rising by 5.1% on a like-for-like basis. Other "main growth drivers" in the US included True Compass by Edward Kennedy, Say You're One of Them by Uwem Akpan, Lies My Mother Never Told Me by Kaylie Jones and Malcolm Gladwell's Outliers.

There was further sales growth in the United Kingdom but Spain reported a slight dip, mainly due to lower sales in education, Lagardère said. Lagardère said its publishing business faced "a particularly challenging fourth-quarter comparative", as the success of the Stephenie Meyer saga drove like-for-like sales growth to 6% in the fourth quarter of 2008.

ThomsonReuters (Press Release):

Glocer commented that 'the worse may be over'
Revenues from ongoing businesses were $3.2 billion, a decrease of 2% before currency and 4% after currency. IFRS revenues were down 4% after currency against the prior year period.

Underlying operating profit was up 3% to $711 million, with the related margin up 140 basis points, driven by the benefit of currency, integration-related savings and a continued commitment to strong cost management.

Adjusted earnings per share were $0.43 compared with $0.47 in the third quarter of 2008. The decline was due to higher integration-related spending, which is included in adjusted earnings but not underlying operating profit.

Borders announced that they would close the remaining mall stores by early 2010 (PR):

As part of Borders Group's ongoing strategy to right-size its Waldenbooks Specialty Retail segment and emerge with a smaller, more profitable mall chain in fiscal 2010, the retailer will close approximately 200 mall stores in January, leaving approximately 130 mall-based locations open. The list {of closures} is not final and is subject to change pending finalization of agreements over the coming weeks. Importantly, today's announcement regarding the mall business does not include Borders superstores or the company's seasonal mall kiosk business, which includes over 500 Day by Day Calendar Co. units, among other mall-based retail concepts.

Newscorp reported their results including improved results at Harpercollins (PR):

HarperCollins operating income of $20 million increased $17 million versus the same period a year ago due to higher sales at the Children's and General Books divisions, as well as reduced operating expenses from restructuring efforts in the prior year. First quarter results included strong sales of Where the Wild Things Are by Maurice Sendak, The Vampire Diaries by L.J. Smith and the paperback edition of The Story of Edgar Sawtelle by David Wroblewski. During the quarter, HarperCollins had 47 books on The New York Times bestseller list, including four books that reached the number 1 spot.

Torstar the parent of Harlequin reported (PR):

Book Publishing operating profit was $22.9 million in the third quarter of 2009, up $4.2 million from $18.7 million in the third quarter of 2008, including $2.0 million from the impact of foreign exchange. Year to date, Book Publishing operating profit was $63.1 million, up $9.9 million from $53.2 million in the first nine months of 2008, including $5.1 million from the favourable impact of foreign exchange. Underlying results were up in North America Direct-To-Consumer and down in North America Retail for both the third quarter and year to date. Overseas was down in the quarter but up year to date.

Murdoch on the Kindle and Paid Content

From their earnings conference call yesterday (SeekingAlpha):

If it is possible to charge for content on the web, it is obvious from the Journal’s experience. We are now in the midst of a [proper] debate over the value of content and it is clear to many newspapers the current model is malfunctioning. We have been at the forefront of that debate and you can confidently presume that we are leading the way in finding a model that maximizes revenues and returns for our shareholders. I can assure you we will not be feeding our content rights to the fine people who created the Kindle. We will control the prices for our content and we will control the relationship with our customers. Any device maker or website which doesn’t meet these basic criteria on content will not be doing business long-term with News Corporation.
Too many content creators have been passive in the face of obvious violations of intellectual property rights. We rightly hold China and other countries accountable on this important issue. But the violation of these rights is rampant on the web in our own country. Our content is extremely valuable and the violators have recognized that value.
Within the company itself, the very bright people we have at our Slingshot Laboratories are devising clever ways to monetize the content of some of our long established print properties. We will be matching their contemporary expertise and the creation of communities within our traditional -- with our traditional expertise in the creation of content. The [current days of the Internet] will soon be over.

PS: Barely a mention of Harpercollins. A tough 3rdQ means HC will need a very strong 4thQ to finish the year in positive territory. (PublishersWeekly)

Book Army From Harpercollins

Looks like Harpercollins UK are set to announce a book social networking site similar to Goodreads.com and librarything.com. Named BookArmy, users will be able to build a library of books using ISBNs, tag them and interact socially (online) with other book lovers. Importantly, the site is not restricting the participation to books published by Harpercollins.

In a post I wrote about branding several weeks ago, I wondered who the first major publisher would be to incorporate a books in print database on to their site and it looks like HC UK will be the one. (In comments to that post some did point out Bloomsbury tried this approach years ago).

No doubt there will be some questioning why we need another book oriented social network when we have shelfari, goodreads and librarything. Certainly a valid question, but I doubt the goodreads people wondered if they could complete with librarything when they got started and here they are only a few years later with bigger traffic. There is no reason to believe that HC will not appeal to a new segment - or steal some of the users from the incumbents. I hope they will be able to instill in the BookArmy brand something that is unique and unifying because if the site comes across as HC corporate in disguise it is unlikely to be successful. I think the HC people are smart enough to realize that.

Harpercollins is very actively trying new things online. There US site is vibrant and full of experimentation. Some have argued that they don't go far enough in allowing access to their content but the point is they are not adverse to experimentation. The UK and the US online exercises do seem to be different in approach. It is not that they are uncoordinated but their respective approaches seem different. In the UK BookArmy and Authonomy.com are examples where they have have taken the potential of the web to build community just a bit farther than the US office is doing.

What could be most interesting about this is how successful HC will be in promoting the site across the other NewsCorp sites particularly Myspace. If they are able to gain traction there then we could really begin to see a significant player in book social networking. Perhaps even a transaction site that could become very significant given the concentration of users around the Myspace brand. On the other hand, your typical Myspace user may not be the perfect book reader and therein lies the challenge. Taking the battle directly to the group less interested in reading could be just the thing that builds some renewed interest in published content.*

I hope to have more on this when the site launches next week.


* I am not saying the typical Myspace user doesn't read: We need them to read books in quantity!

Harpercollins Closes Year Flat

Harpercollins saw a 18% increase in fourth quarter revenues that helped the company finish the year with operating income flat with 2007. Revenues for the quarter were $350mm versus $295 in the prior period. Full year revenues were $1,388 versus $1,347 in the prior period.

Here is the relevant section from the NewCorp press release:

HarperCollins reported fourth quarter operating income of $28 million and full year operating income of $160 million, an improvement of $7 million and $1 million as compared to the prior year periods, respectively. Current quarter results were led by strong sales of Bright Shiny Morning by James Frey, Stolen Innocence by Elissa Wall and an updated edition of YOU:The Owner's Manual by Michael F. Roizen and Mehmet Oz. During the fourth quarter, HarperCollins had 62 books on The New York Times bestseller list, including Read All About It! by Laura and Jenna Bush which reached number one. For the full year, HarperCollins had 165 books on The New York Times bestseller list, including 14 titles reaching the number one spot.

Thus the company had a margin improvement of 1pp in the final quarter but a slight decline over all. Well reported has been the change in senior management at Harpercollins with Brian Murray replacing Jane Friedman. Murray, in turn, has made changes in the executive suite notably the replacement of Glenn D'Agnes who was the long term COO.

Details on Harpercollins are always sparse in the NewsCorp disclosures and the company is rarely mentioned in the earnings conference calls.

My Wall Street Journal!

A parody of the Wall Street Journal is to be published in celebration of tax day tomorrow. Apparently some of the copies have leaked in advance and one copy has made its way to the executive suite at News Corp.




(Fake, but funny; especially the bit about Roger Ailes).

Broadcasters Unite!

What if CBS, NBC and ABC launched a joint web-based broadcast portal? Highly unlikely you say? Well, in the UK pundits might also have dismissed out of hand the notion that the BBC, ITV and Channel 4 could ever agree on anything let alone jointly developing a web portal for distribution of their content. Today these three companies announced they would launch such a web site in the early part of 2008. All three have existing web content portals and both BBC and ITV intend to keep theirs going in the short term. Earlier in 2007, the BBC launched their i-player client which has not been as successful as the hype that presaged its launch would have suggested. Residents outside the UK are unable to use the i-player and it is assumed the tri-company web site will be off-limits to non-UK users.

The web activities of BBC and ITV place them significantly ahead of the network broadcasters in the US. One aspect of their business model which has made their experimentation with web distribution possible is that the UK companies generally own the content they broadcast. This is not the case in the US although in recent years the networks have built production capability.

The collaboration in the UK will be watched closely and while it may be spun as a consumer bonus - having one location to access the content from the nations' primary broadcasters - the reality could be more prosaic. The costs of building and maintaining a portal for this content could be extreme and each would ultimately be in a race to augment their content with content from other providers. Why not join forces, pool resources and reduce the market for third (fourth) party content? It makes a lot of sense especially in a market that isn't that large to begin with.

In the early 1990's Sky beat the traditional broadcasters into new distribution territory and the broadcasters had no solution. As a result, they lost out on a vast expansion of the consumer broadcast market (satellite). In developing this new collective content portal they could be setting themselves up to be meaningful players in a potentially much larger market place for distributed content.

When Newscorp launched Sky these players were warming the bench but this announcement may enable them to have a role in the future of television.

Harpercollins Reports Higher Revenues

Newscorp reported financial results for their fiscal 2007 (ending June 30th) and while understandably much of the conversation on their conference call related to Dow Jones there was not one reference to Harpercollins. (Transcript). At this stage it would be premature to read anything into this for a few reasons. Firstly, Harpercollins has done consistently well over the past several years. Revenues and profits are down recently but they are off the back of a few very strong years and in particular several strong titles. Secondly, there is a divestiture log-jam at NewsCorp as they look to sell Gemstar, some small TV stations and some of the community titles that came with Dow Jones.

Harpercollins reported revenues for the quarter of $295 million, a $39 million improvement over 2006. Full year revenues of $1,347 million were $35 million better than the prior year.

Operating Income results at Harpercollins were as follows from the press release:

HarperCollins reported fourth quarter operating income of $21 million, an improvement of $27 million versus the fourth quarter of fiscal 2006. Full year operating income of $159 million declined $8 million from prior year results that included strong sales of The Chronicles of Narnia by C.S. Lewis. Current quarter results were led by sales of The Dangerous Book for Boys by Conn and Hal Iggulden and The Reagan Diaries by Ronald Reagan. In addition to these titles, full year results included strong sales of Marley and Me by John Grogan, The Measure of a Man by Sidney Poitier and Michael Crichton's Next. During the fourth quarter, HarperCollins had 53 books on The New York Times bestseller list, including 8 titles that reached the number one spot, and for the full year HarperCollins had 128 books on The New York Times bestseller list, including 16 titles that reached the number one position.

Operating margin of 11.8% in 2007 declined almost 1 percentage point versus 2o06. No detail was given on the margin erosion.

PDF of the earnings report is here.

NewsCorp Deal for Dow Jones All But Done: Now Done

Update: Pop the corks: Reuters

Reuters is reporting that the deal is done - then they changed their headline to 'deal expected Tuesday'. Assuming definitive agreement is reached at the DJ board meeting later today, Rupert Murdoch gets the biggest name in financial news reporting. Don't be surprised if we see him wrap the WSJ brand around his new financial news cable channel.

From the report:

"The Bancroft family has accepted," John Prestbo, editor and executive director of Dow Jones Indexes, told reporters in Chicago. He said Dow Jones "will be part of News Corp." Prestbo said the information came from an internal company memo.

New York Times: Murdoch Wanted it More

Dow Jones Cliff Hanger

Apparently, things are on a knife-edge at NewsCorp. The deal deadline was set for Monday 5pm but not all the legal documentation was submitted on time. Murdoch awaits the news with increasing impatience and at the least it appears the margin of victory is going to be very close. Murdoch may win a significant portion of the vote but it looking for a major endorsement of the deal. Analysts suspect he is looking for more than 30% of the Bancroft shareholders to support the deal. Some insiders suggest he has this: With the stock price ready to tumble if the deal falls through - and the stock price fell 5% yesterday - some shareholders may cave and vote with their wallets.

Trib
Forbes: News Corp Unlikely to Proceed with Bid
Reuters
Forbes: The MySpace Guy

News Corp and Dow Jones

So we should find out within the next week whether the Brancroft family will accept the NewsCorp offer, but I have to wonder whether some type of all-points bulletin went out across the NewsCorp empire: "Don't publish anything low-brow, scandalous or let The Boss influence your thinking". At least until this business is over. It would be bad timing of a momentous nature that could have the Bancroft family perusing some questionable covers of The Post or The Sun or even reading some politically charged editorial in The Times while meeting to determine the fate of the company. And of course if for some reason they missed these indicators, there are rivals like The Daily News that joyously draw them to their attention.

Coincidentally, The New York Times released some private archive material of the owning family, Ochs Sulzberger to the New York Public Library. There is nothing recent yet (although additional material is anticipated to be made available soon) but there are interesting items relating to the relationship between the Editorial philosophy and that of the owners,

Many of the documents reveal the newsroom’s sometimes prickly relationship with its owners. “It’s difficult for me personally to take a position not in accord with the wife of the Publisher,” Edwin L. James, the managing editor, wrote to Arthur Hays Sulzberger on June 22, 1949, after Iphigene Sulzberger complained about placement of a story involving Cardinal Francis Spellman. (A spirited defense of the news desk’s judgment followed.)

Will we ever see Murdoch's personal archive...? Do we want to? What happens if the deal doesn't is not accepted? You can bet that News Corp has an alternative plan ready to roll if the Dow Jones bid fails.

Von Holtzbrinck Resigns from Dow Jones Board

Dieter von Holtzbrinck, the heir to German media conglomerate von Holtzbrinck has resigned in protest over the decision by the DJ board to recommend acceptance of the NewCorp bid for the company. von Holtzbrinck apparently abstained from the vote last week (Post) but had been vocal in recommending the company remain independent. Apparently, the Bancroft family (there are dozens of shareholders) will decide over the next few days/week whether to accept or not, the NewsCorp bid.

(For those unfamiliar with von Holtzbrinck, they are a family owned business operating newspapers, trade publishing, education and digital media businesses in over 80 countries. In the US they own FSG, St Martins, Henry Holt and in the UK they own Macmillan).

In related news, the company posted mixed results (Money) this week with traditional media showing decreases but with international, Barrons and some digital revenues up. Some analysts speculated that the continued softness in DJ's traditional sources of revenue may cause some Bancroft shareholders to take the money and run. In trading, the share price was down slightly based on doubts about whether the deal with NewsCorp would be completed.

Murdoch Gets Dow Jones

All media is now reporting the inevitable disclosure that NewsCorp has agreed terms with Dow Jones to acquire the company. Long live the Wall Street Journal.

Guardian
Telegraph

NYTimes: Hardly the Mike Wallace Treatment

Apparently, I am not the only one that feels that the New York Times' 'expose' on News Corp lacked any depth or provided new information on the manner in which Murdoch runs his business. (Paidcontent) You really have to consider the NYT's motives in this given they are themselves a family run operation similar to Dow Jones that has been left behind by the media revolution and they ran an editorial two weeks ago supporting the family's (supposed) wish to stay independent. It was more than disingenuous and perhaps in the interests of full disclosure they should have mentioned their own dual equity arrangement that keeps the Ochs/Sulzberger fully in control and the public shareholders out in the cold.

(As I may have mentioned, I retain some deep seated resentment towards Rupert Murdoch because as a 14 year old newspaper seller in Melbourne Australia they raised the price of the Herald from 8cents to 10cents and in the process did me out of a virtually guaranteed 2cents on every sale. That added a lot to my daily take and I soon realized that selling newspapers on a street corner was no kind of future).

Murdoch should get Dow Jones if for no other reason that he is willing to rebuild the franchise to compete in a new media, connected and multi-channel world. The Brancrofts aren't and I think that most people would like to see the Wall Street Journal retain and perhaps increase its influence and standing not just in the US but internationally. Murdoch has proven News Corp can manage and grow substantial media properties and Dow Jones will be no different. It is stupid to assume that any proprietorial media property is without bias or doesn't reflect some level of influence from the owner; but, customers (and staff) either support it or not and Murdoch (or the NYT) are not going to undercut the credibility of their properties to spite their revenue.

Pearson, GE and Dow Jones

While Pearson has not admitted engaging in any discussions there is much too much noise about this possible deal for nothing to be going on. The Independent has an article this morning which examines how the deal may be done that enables Pearson to retain earnings growth and return rates that they have promised shareholders.

So Pearson has been casting about for a partner, with the latest mooted structure being a joint bid with GE, the outcome of which would be a joint venture where the two own equal shares of 40-45 per cent and the Bancroft family retain a stake of 10-20 per cent. GE would put CNBC into the joint venture, Pearson would put in the FT and possibly some of the other assets from the FT Group, which also owns The Economist and a host of specialist financial magazines and databases. One or both would also have to contribute some cash so that the Bancrofts and Dow Jones' other shareholders could get something close to Mr Murdoch's $60-a-share for their holdings.

The odds are still with NewCorp but it looks like being a far more interesting process than it looked two weeks ago.


UPDATE: Bloomberg

GE and Pearson have dropped their discussions on a potential bid for Dow Jones. The odds are even more in favor of News Corps bid and the market agrees. The stock price for DJ has settled at the offer price.

News Corp Discusses Combining MySpace and Yahoo

An interesting story in this morning's London Times that suggests that News Corp executives and Yahoo have discussed the combination of MySpace with Yahoo. News Corp would retain approximately 25-30% interest in the combined entity. With the departure of Terry Semel, the discussions could die a quick death but with the massive strategic issue that Google poses to Yahoo the company must be thinking that organic incremental growth is not going to cut it and that they will need to construct more than one major deal to both build momentum and compete aggressively with Google. The combination with MySpace is certainly interesting but if you coupled that deal with a merger with EBAY - which also has its Google problems - and suddenly you have a legitimate antidote to Googleness.

Pearson and Dow Jones

I half jokingly suggested that Pearson would take a look at Dow Jones amid speculation that Pearson was next on News Corps list if the NewsCorp bid for Dow Jones didn't work out. Most competitive bidders for DJ face considerable hurdles matching the current Murdoch bid but Pearson may have a hidden advantage in that the Bancroft family may be willing to take less money from Pearson in exchange for the understanding that the financial icon will be better protected journalistically under Pearson than under NewsCorp.

Reports suggest the likelihood of a bid is low, but if they were to end up with Dow Jones, it would be somewhat of a redemption for Pearson chair Scardino who has steadfastly refused to sell the FT group in the face of baying analysts and some shareholders who believed the group a looser. Combined with Dow Jones they would own three of the top ten news and financial journals in the world all of which (WSJ, FT, Economist) have exceptionally strong branding around the world. The next questions would be what do they do with it if they get it?

New York Post (Murdoch Paper)
NYT

The Murdochs and the Bancrofts

Looks like there has been a change of heart in the Bancroft family and the sale of the company looks all but inevitable. Reuters

From the article:

The Bancroft family, which controls 64 percent of Dow Jones's voting power, said it would also look at offers from other bidders. Dow Jones in a separate statement said the board would consider News Corp.'s offer and other approaches.

The Bancroft decision is a change from its earlier rejection of Murdoch's $60-a-share bid, and brings the publisher of The Wall Street Journal closer to being sold after more than a century of being independent.

Obviously, assuming Murdoch gets this prize it would be unlikely that he will have a go at Pearson. Clearly the market sees this as a real event and the stock was up sharply on the news to slightly below the Murdoch offer level.

Is Pearson Next For Murdoch?

In a recent article about Rupert Murdoch and his bid to acquire Dow Jones, The Economist newspaper reported as an aside that while at the Davos World Economic Forum Murdoch was trying to interest as many PE groups as he could in a combined News Corp/PE bid for Pearson. Dow Jones has always been his preferred business publication and he sees the Dow Jones property as key to the development of his global business channel; however, if the Dow Jones shareholders appear intractable then he is likely to launch an attack on Pearson in order to get his hands on The Financial Times and The Economist Group.

For their part, the Pearson board and top executives have said that they are unwilling to sell or to split up the company. In spite of this consistent message, with the sale of the Thomson Learning business for almost $1.5billion more than Thomson and analysts expected one must wonder when the views of the board begin to diverge from the interests of the shareholders if valuations like this are on offer via PE money.

According to a number of sources, the hold out Bancroft family is set to meet today to discuss the News Corp offer. Murdoch has proven to be fairly patient in his effort to acquire Dow Jones but he has promised a financial network to compete with CNBC and needs content and branding to support that effort. The synergy that will exist between the US based Dow Jones and News Corp and the brand recognition and reach of The Wall Street Journal will trump the larger international presence and brand of The Financial Times. I suspect Murdoch will continue with his full court press on the Bancrofts for the short term - he is unlikely to up his offer - and he is probably willing to gamble on an auction should the Bancroft shareholders decide to seek other offers. While there is a lot of PE money going around, the Murdoch price is a fair one given the trading level prior to the bid. Some have also suggested that the share price will tumble below this original level if Murdoch is rebuffed.

With respect to Pearson there exists a possibility that they could be 'blackmailed' into parting with The Financial Times if someone started to buy up shares of the company; however, this seems unlikely since the moment any group launches any type of offer there will be several additional offers presented almost immediately. I suppose Pearson could defend itself by making a big acquisition and loading up on debt but who would they buy....Dow Jones?