Rupert Admits He Paid $2.8 Billion too Much for Journal, Encourages Times to Bring Back Online Fees

By Kyle Austin

February 6th, 2009

On a conference call last night discussing News Corp.’s fourth quarter and fiscal results, Rupert Murdoch admitted that its net loss was $6.41 billion, or $2.45 a share, for the fiscal second quarter ended Dec. 31. That compared with a profit of $832 million, or 27 cents a share, a year earlier.

The net loss also included an $8.4 billion write off, which Peter Kafka of MediaMemo provided more insight on this afternoon. Turns out 1/3 of that write off, or $2.8 billion, is getting assigned to the company’s $5.7 billion purchase of Dow Jones (publisher of The Wall Street Journal). Meaning Murdoch, who understood he overpaid for the Journal on purchase, actually paid more than twice as much as the Journal is worth.

Murdoch went on to say that News Corp.’s dismal numbers, the latest in a string of dreadful media corporation results amid shrinking ad revenues, were due to the “Worst global economic crisis since News Corp was formed 50 years ago.”

Another interesting part of the call last night, highlighted this morning by Henry Blodget, was Murdoch’s insight into the online subscription fee options for the New York Times. This coming a few days after New York Times editor Bill Keller speculated that the Times may try to bring back online subscription fees in some capacity. From Blodget, Silicon Alley Insider:

“Murdoch noted that the Wall Street Journal, which charges a subscription fee, generated $120 million of online ad revenue last year.  The New York Times, which doesn’t charge, only generated about $150-$175 million (our estimate).

Combining the two fees, the Wall Street Journal is the larger online business.  It also doesn’t have to slash its ad prices because it has a huge glut of online inventory, the way the New York Times does.  It is more insulated from ad depressions like the one we’re enduring. And it has a valuable paid relationship with a million subscribers who it may be able to sell additional services to.”

Entry Filed under: Mainstream Media