Murdoch: WSJ Will Take NYT Market Share In "Months"; Baffled By The YHOO/MSFT Mess (NWS)

We love listening to Rupert Murdoch talk, mostly because Rupert Murdoch loves to talk. But perhaps because we're professional Rupe-watchers, we've heard a lot of what he had to say about News Corp., the news business, MySpace, etc. On the other hand, because his D chat was a leisurely, discursive romp of an interview, there was all sorts of interesting Rupe musings about the economy (the U.S. is deeply screwed for at least 18 months, but he's a big believer in a long boom), politics (he hasn't decided who he's voting for, but he's ready for Obama to make him a believer), and Keith Olbermann (not interested in hiring back his former employee to work at Fox News, in case you were wondering). We'll sum that up in a separate post.

For the tech and businesss set:

• Rupe talked a big game re: plans for the WSJ. He thinks he'll take market share from the NYT in a matter of months by pushing into general news.
• He can't figure out the Yahoo/Microsoft deal at all: He doesn't understand how Jerry's been able to not sell the company when offered a huge premium, and he can't figure out why Microsoft was unable to make it happen. One theory: MSFT isn't used to making huge deals.
• Hulu important to him because it's a way to control his copyrighted material. But if that's the case, why didn't he sue YouTube, a la Viacom? "We had mixed feelings about it, but when it came down to it, we figured it was doing more to promote our shows than it was to hurt them".

Transcript notes follow, video at end of post.

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Rupert Murdoch drops by the D conference, well-attended by many of his employees. No surprise: He now owns the conference itself.

Rupe is casual in a sweater/open-shirt combo. Glasses look vaugely tinted.

Will papers survive? I hope so. But they'll have to do it themselves. But deterioration of newspapers is a huge opportunity for the WSJ. Huge opportunity to service the top 10% of the most affluent, most influential, etc. Business still mostly print, but more and more transfering to the Web. Lots of free commodity stuff, but we'll still charge for premium content. "Very, very valuable."

You changed your mind on that, right? "When I saw how much money was involved," yes, I did. 1.1 M subs paying $100 a year, and I think they should pay $150. It has value. Rich people in Florida love it. They have to read it. "They have nothing else to do."

We can definitely extract much more for our content than we're getting. We have 2,000 excellent journalists, and we have to be able to get more money for their work.

Journal copy touched or edited by 8.3 people. "That's ridiculous". Stories get too long, and people don't have time for it. Can do it in half the space. Walt's column, though - that's perfect.

Average WSJ sub brings us $125 a year. NYT closer to $500. There's a lot of room for us to grow.

Journal aiming at NYT, getting broader. Worried about diluting the brand? I think it can be better in finance, and it will be. But we will add to that general and international news. People don't understand: It's important for businessmen to know what's going on in the world. DC buro doing a good job, but we have to other buros contributing -- we have to cover major national news, and international news.

I think we'll take share from NYT "right away -- it will happen over several months." Then NYT will react.

Onto online stuff. Explain why you picked MySpace all the way back in 2005. "We came to it late. We decided we had to get on the Web in a major way." We did the deal in a weekend (true - check the S1)

Rupe's take on MSFT/YHOO: "I'm mystified. I can't understand the whole thing." I understand aspects. Jerry Yang's a friend, and we all admire him, and I get the emotional attachement. But he only owns 5%. And all the shareholders wanted to sell. and MSFT -- they're not used to buying big things.

What would you have done? What Barry Diller said: Pay a premium, and leave it there. They'll come to you.

So what will happen? It wouldn't surprise me if Yahoo does Google deal. But there's DOJ risk. It would be very sad if they did it, and the deal got hung up for a year while Google continues to eat their lunch.

What would you do if you were Ballmer? I'd get on with it - re-offer $33, $34 and say that's it. If it's complicated we can clean it up later. Icahn? Wouldn't worry about it. From Microsoft's view that's a helpful bit of noise.

What's your role in this? Yes, we've talked to them (Yahoo). There was a possiblity at one time that we'd put in MySpace into a separate company (Trafficco), but that's gone away. We're a media company. Lots of people in Silicon Valley that say they're a technology company, but we're not.

Back to MySpace: Facebook has been darling of tech media. You don't hear so much about MySpace. So wtf? Well, you do hear a lot about MySpace -- we had hit a cold patch but in last six months we've developed tremendously. But we're huge, and still expanding internationally. In this country we're 2x bigger than FB, etc etc. Repeats standard metrics. I'm not against Facebook. They've done a great job. But it's different.

Did you consider buying Bebo? Not at that price. What price? Hmmm. It was a year ago. Things move pretty fast.

How do you expand MySpace brand outside the US? We've had no difficulty in Britain, Germany, France, etc. There's so many places to go: India, Eastern Europe, etc.

Do you use MySpace personally? No.

TV: Explain rationale for Hulu. Walt thinks it's thin on content. "I think you're right" but we're adding more. "As far as we were concerned, we wanted to control our own copyrights. And we thought this was a pretty good way to do it."

Will TV go away? No. "Television will be absolutely central." People will want to watch shows on a big screen TV. But we want to monetize and control distribution as much as possible.

So why didn't you sue YouTube? Plenty of pirated stuff there. "All the time." Simpsons are all over it. "We had mixed feelings about it, but when it came down to it, we figured it was doing more to promote our shows than it was to hurt them" (scattered applause).

What's future of movie distribution: Traditional outlets or Web? "I'd love to see all the windows closed" so released in all formats same time. But entrenched interests, like movie theaters. But we're moving it up all the time. "Every movie studio wants to close the windows as far as possible." Would you experiment with a day-and-date release via a PC? Maybe. But skeptical. Walt's really selling this, but Rupe's not really interested.

Social network advertising: Why is Google complaining about MySpace ads? They're complaining to cover up other problems. At FIM, we're going to miss our number this year by 10%. That's $900 million. No other company on the Internet has grown the way we have. It's a new medium, still experimenting. A long way to go. "It's coming. But it's an educational process. It's an experimental process. It's something new."

So... still getting along with Google? "I think they're fantastic. But you don't want anybody to be a monopoly." Ballmer's right to try to engage them and get in their own game and see if he can damage them there.

What would you do if you were Yahoo? How do you compete with Google? They made a "fatal mistake" by sitting on Overture. They have a "huge job ahead of them just to hold onto their 20%. I wish them luck." And MSFT? "How can they build on their 8 or 9%? I don't know."

Discussion of Fox News. Rupe trying to defend Bill O'Reilly. So where's your liberal equivalent? Will you hire Keith Olbermann? "No. I fired him 5 years ago." When he was on FoxSports every night. "He was crazy." But find me somebody else good and I'll do it.

Rupert on election: Both Obama and McCain have a lot of problems. But you have probably the making of a phenomenom in this country. Politicans are at an all-time low. They're despised. Obama drew 75,000 at Portland rally, and he'll carry Oregon. But "he might not carry Florida, because the Jewish people are suspicious of him, and so are Hispanics." And while people won't talk about it, race will matter.

So what's McCain's issue? "He's been in Congress a long time, and you have to make a lot of compromises. So what's he really stand for?... I think he has a lot of problems." So who are you backing? "I'm not backing anybody. But I want to meet Obama." I want to know if he can walk the walk. Have you read his educational policy? It's great. But it means that in his first six months in office, he has to smash the teacher's unions.

Did you have anything to do with the NY Post endorsing Obama in the NY primary? "Yeah."

How do you feel about the economy? Tomorrow you're going to read that Dow Chemical is raising prices 20%. It's going to screw up the whole economy. But whole ecomony already in trouble, and next you're going to see unemployment. I don't know how bad it will be. But it's starting to affect other countries as well - it's started in Britain and it will spread to Europe.

So do you think this is a real recession? Yeah, and it's "one that I don't see us coming out of for quite some time."

How would you deal with oil problem? Let people drill off the West Coast. If people don't want their views ruined, make them do it 50 miles away.

But long-term, I'm very optimistic. Some 3 billion people, mainly in Asia, coming out of intense poverty. And the world is getting wealthier. All I can see is expansion and wealth creation for the next 30 years. But "for the next 18 months, I think this country is in for a very hard time".

All over the place: Any other interest in big Web acquisitions? Nope. May do little add-ons, but we're staying where we are.

Qs: Who are most interesting competitors 3 years from now? "I've got no idea". Is Google a competitor? I don't think so... Who do you think? He asks questioner Quentin Hardy: "Google, Facebook in an alliance with somebody" -- "or maybe on their own", says Rupe. What about the FT? Nope. Pearson's going to get broken up, and FT will get sold. Maybe Bertelsmann will buy them. They're someone to take very seriously. Are CBS and Viacom competitiors? Not really. Strong cable offerings, but not in movies.

How do you solve problems of local newspapers? Different problem than national papers. What would you do if you faced that problem? "I'd run. They're going to have to put up with 10% margins instead of 30% margins." Some won't survive. Solutions? "Yeah. Start writing articles people want to read. Stop writing articles to try and win Pulitzer Prizes."

Who are you voting for? "I don't know. I want to be convinced that Obama is the real thing, that can really carry through. I'm open to that."