Rupert Murdoch's New News Corp

By Michael Wolff, Guardian UK

03 December 12

A newspaper empire is reinvented, but will Robert Thomson find himself playing Sancho Panza to his boss's Don Quixote?

upert Murdoch spent several months trying to convince his son Lachlan to lead the new public company, due to launch this spring, that will house News Corp's newspapers, book publishing company, education-business initiatives, and Australian television investments. But Lachlan demurred, fearing that his father would be, as always, a hands-on meddler and, indeed, the person who was actually running the show.

So, instead, his father has selected his "other" son. Not James Murdoch, discredited in the phone hacking scandal, but Robert Thomson - the managing editor of the Wall Street Journal, with whom Rupert has developed a uniquely close relationship, and Melbourne boy (like Rupert), with a Chinese wife (like Rupert). In selecting Thomson, whose career has been exclusively on the editorial side, Murdoch and the company immediately lost Tom Mockridge, the executive who, last year, inherited the News International mess and who hoped to be rewarded for his difficult labors.

Murdoch's decision to appoint Thomson, an unlikely choice to lead a billion-dollar public company, is a conspicuous one. Thomson is a career journalist in the Australian mode, eschewing university for a place, at 18, in a Melbourne newsroom. While he has been a business journalist at the Financial Times, and run a several-hundred-staff newsroom at the Times in London, and an even larger newsroom at the Wall Street Journal, he has not held any of the traditional financial, sales, and business managerial posts. Nor has he had any of the public company experience that is virtually a requisite for leading a large and complex publicly traded firm.

Thomson himself is not even the chief executive of Dow Jones. That role is held by former Bloomberg executive, Lex Fenwick, to whom Thomson currently reports.

Thomson's primary business credential is his relationship with Murdoch.

The new company, forced into existence by the pressures of the phone hacking scandal and by the unhappiness of News Corp's executives with the shrinking newspaper business (and its effect on their own bonuses), begins with myriad problems that might challenge the most brilliant business mind. The British operation - the Sun, the Times, and the Sunday Times - is tainted by that scandal and also faces steady and inevitable circulation and advertising declines. The US newspapers - the New York Post and the Wall Street Journal - may together lose as much as $200m a year. The Australian newspapers, too, continue to decline. The education company, largely still-born, needs significant investment. The low-growth book business faces technological upheaval and consolidation. Only the Australian television investments seem sound.

The fair assumption is that, dealing with these issues - on three continents - will present Thomson with a harrowing learning curve. The reasonable follow-on assumption, which Lachlan Murdoch made, is that these challenges will most of all be faced by the new company's chairman, Rupert Murdoch - much more so than by his junior partner, the company's CEO.

A relevant note, it might seem, is that when I interviewed people about Thomson's tenure at the Times several years ago, one former senior News Corp figure described Thomson as the most malleable editor whom Murdoch had ever had in the Times job, the one most interested in giving Murdoch what he wanted - indeed, one more interested in Murdoch than in the Times.

Meanwhile, back at News Corp, the Daily, the tablet-focused news product personally invented (or ordered up) by Murdoch himself two years ago, which found few readers and met with almost universal ridicule, was closed with immediate effect. This may not be as notable as the fact that its editor, Jesse Angelo, the former No 2 editor at the New York Post, and a Murdoch-family favorite, has, simultaneously with the Daily's closing, been installed as the publisher of the New York Post.

Now, Angelo, like Thomson, has only ever been an editorial hand. But in the publisher's job, the main responsibility of the socially maladroit Angelo, will be to deal with advertisers. (Curiously, the publisher of the failed Daily, Greg Clurman, will now oversee global digital strategy at the company.)

The split of New Corp into an entertainment company, containing the profitable US film, broadcast, and cable assets, along with other international satellite operations, and the new newspaper-focused company, was initially opposed by Murdoch. But accepting the inevitable, and perhaps as a way to defend his beloved newspapers, he has become fully focused on this new company and has set out to make it in his image.

As it happens, this involves taking people from his money-losing companies and putting them into top positions at the new company. This is partly because he likes them - they are the kind of newspaper people he is most comfortable with. But it seems likely that it is, too, because they will follow him. What alternative do they have?

Most notably, or quixotically, Murdoch is seriously looking at an acquisition of the LA Times and the Chicago Tribune - Murdoch showed up in Chicago just the other day - even though his experience with American newspapers has never been particularly successful. One would be hardpressed to imagine anyone with traditional public company financial experience being excited about this. On the other hand - and perhaps Rupert is making this argument to his new executives - the LA Times and Chicago Tribune, however diminished they have become by bad owners and hopeless business conditions, actually still make a bit of money. Next to the other, loss-making US papers, they'll be jewels in the crown.

Oh yes, and Jesse Angelo's father, John Angelo, a principal in the distressed debt firm of Angelo, Gordon & Co, which owns a lot of undesirable paper in the Tribune Company debacle, is eager to sell.

This new band of brothers will follow their leader wherever he goes.