WHAT'S NEXT: INNOVATIONS IN NEWSPAPERS

Rupert Murdoch’s the News of The World is a trashy Sunday tabloid.

Really trashy, full of yellow journalism.

But today they have a sad story about a wild party night for Michael Phelps in Columbia, South Carolina.

The paper claims that he was smoking a cannabis pipe, and that’s the picture of the day.

The PR machine of the Olympic swimmer wanted to stop the publication of the picture.

And the News of The World, which sometimes pays for pictures and articles about scandals, this time did what any newspaper has to do.

In their own words:

“Phelps is represented by marketing giant Octagon, which works with huge brands such as Mastercard and HSBC.

They admitted proven cannabis use would be “a major taint” on Phelps’ character.

Spokesman Clifford Bloxham offered us an extraordinary deal not to publish our story, saying Phelps would become our columnist for three years, host events and get his sponsors to advertise with us.

In return, he asked that we kill Phelps’ bong picture.

Bloxham said: “It’s seeing if something potentially very negative for Michael could turn into something very positive for the News of the World.”

Another fallen hero.

And an expected end of a life that he once described as:

“All you do is eat, sleep, swim; eat, sleep, swim; eat, sleep, swim.”

What a compelling human story to tell!

That nobody covered.

Now we will get it.

Thanks — oh dear — to the News of The World.

Sir Martin Sorrell, Chief Executive of WPP, blogs from Davos at the Financial Times.

Bad, boring blogger.

But great FT idea.

Pure advertising.

With great insights.

Are you ready?

What about this one?

“Participant numbers should be reduced.

Security is also very tight, aggravated by the crush.

There are heavy lines and queuing, especially early in the morning.”

A few months ago, Africa Israel USA, a unit of Africa Israel Investments, paid $525 million for the landmark building that has served as the headquarters for The New York Times for the past 94 years.

Tishman Speyer purchased the building from the newspaper company in 2004 for $175 million.

And now, Tishman has been able to sell the building for triple what it paid the Times only three years ago.

So, real estate is not the expertise of The New York Times’ top business management.

Investors know better, and today, the shares of the newspaper company are at $18.64

The value of the company is now half of what Rupert Murdoch paid for Dow Jones.

Rupert Murdoch speaking about Dow Jones at the 2007 annual News Corporation stockholders’ meeting on October 19, 2007:

This strategic acquisition includes not only The Wall Street Journal, the world’s pre-eminent business newspaper, but other prestigious brands and a range of content that will provide us with remarkable reach and flexibility in the growing business news sector.

There is a real hunger … not just in the United States, but across the globe … for financial news

Some interesting remarks from Rich Zannino, Dow Jones CEO, in his last (short) Dow Jones & Company Incorporated third quarter 2007 earnings conference call.

For the past 20 months or so, we’ve been winning in this new media environment by urgently transforming Dow Jones from a company heavily reliant on newspaper publishing to a more content-driven and diversified media company.

We’re well on our way to achieving our goal of being the world’s best provider of high quality business and related content across all consumer and enterprise media channels.

Our online subscription revenue was up 12% in the third quarter, as paid online Journal subs were up over 25% to 989,000.

Our average monthly unique visitors were up nearly 20% to about 17 million in the quarter, with page views up an even greater 34% to 383 million pages.

We are not the wounded and malnourished media dinosaur that many in the press have recently portrayed us to be.

On the contrary, our financial, operating and journalistic performance over the past 20 months is proof that today we are a fast-growing, thriving and vibrant company: one positioned for a very bright future.

From a great, long interview with Rupert Murdoch in Time magazine:

“They’re taking five billion dollars out of me and want to keep control,” Rupert Murdoch was saying into the phone, “in an industry in crisis! They can’t sell their company and still control it — that’s not how it works. I’m sorry!”

I had brunch today in New York with a former editor of The Wall Street Journal.

His opinion:

The Murdoch bid is an offer that the Bancroft family can not refuse.

Why?

Because the $5 billion bid is big, big money.

The Bancrofts will not get more than that.

If they refuse the offer, the management, the journalists and the shareholders of Dow Jones will ask them to invest more… and at the same time the value of the stock could deteriorate very quickly.

So… get the money now and run.

Robert Thompson is a good friend of the current editor of The Wall Street Journal.

And Murdoch has more plans for the future than the lazy Bancrofts, who are interested mainly in good dividends.

It makes a lot of sense.

Shares of Dow Jones gained almost 2% to close at $59.01 Friday on news that Pearson, publisher of the Financial Times was seeking partners for a joint counteroffer for the company that would compete with Rupert Murdoch’s $5 billion bid.

One company Pearson has approached is General Electric, which owns business news channel CNBC.

If, on the other hand, Murdoch acquires Dow Jones, the Journal will compete more directly with the FT in Europe and Asia, and News Corp.’s plans for a Fox News business channel — which would compete with CNBC — will gain traction.

The Bancrofts, who are reluctant to put the Journal’s editorial integrity in Murdoch’s hands, are expected to warm to a Pearson approach, but it is viewed as “a long shot” because of the difficulty of three-way mergers, the lack of a leader, and the expensive problem of cashing out the company’s shareholders.

This is part of the dirty Dow Jones war.

FT?

No way!

If they are not able to fix their own circulation and advertising problems, how are they going to fix Dow Jones’?

Jim Cramer writes in thestreet.com about the 10 Stories You Won’t Read About Dow Jones’ Merger Missteps

I keep thinking about what The Wall Street Journal would write about the following company’s takeover trials.

1. The company gets the takeover bid and the senior officers sit on the bid and disclose it to no one as the stock goes up, making it likely that there will be trading on inside information. That’s why the law wants timely dispersal of material information. Can you imagine the field day the Journal would have with that?

2. There’s an incredible amount of call-buying after the receipt of the bid — but before it is announced as a scoop, no less. Who knows how long the company in question would have sat on it?

3. The board turns out to be a total nonentity and doesn’t even take a position on the bid. Can you imagine what the Journal’s reporters and editors would do with that?

4. The controlling shareholder family’s spokespeople, before the bid is even cold, say the word is “no.” Without even polling the family? Can you get more duplicitous? The polling turns out to be wrong.

5. The scion of a subsidiary chain without any reputation for greatness or even goodness turns out to be the most vociferous board member against the bid. (OK, by now you’ve figured out that I’m abstracting the Dow Jones situation with this News Corp. bid from Rupert Murdoch. Frankly, I would rather work for the worst Murdoch property than the best Ottaway paper. Nobody takes Ottaway to task for that “irony.”)

6. There seems to be only one kind of independence the Journal cares about: reporting independence. How about editorial independence? Why doesn’t anyone there talk about how the editorial page’s view would be preserved under Murdoch but not other owner in the media? Why isn’t that pointed out? Ron Burkle sure wouldn’t preserve that. I think that’s a great point in favor of Murdoch.

7. The resumes are flying out of the bid-for company, yet it never gets reported. (And everyone knows it.)

8. The numbers are so bad since the year began that the hypothetical company in question would be laying off people right now, but management wants to wait because it would look bad and make the need for a deep-pocketed bidder much more evident. (Wouldn’t do to look like they need Murdoch, would it?)

9. The paper seems reluctant to report on the myriad failures to diversify away from anything except for newspaper. (So what? The reason you needed the diversification was to pay for the paper. Instead, all we hear about is the need to preserve purity. You know how preserve purity? You make money away from it.)

10. The new travesty: How could all of these promotions be made today fully knowing that the paper and the company will most likely be sold? What the heck? Where’s the questioning and reporting of that?

Nah. Too close to home.

This story, if it had been any other business, not just the press, would have produced an endless series of stories about how rogue this company has been, how anti-shareholder, frankly, how disgraceful this whole episode has been.

Fortunately for Dow Jones, its executives, its board members and the clueless controlling family, the company owns the most important business newspaper in the country.

What a break.

He is right.

And politically incorrect.

Murodoch or Bloomberg could do it better.

And one of them will.

For sure!

Robert Thompson is the editor of the London Times.

Rupert Murdoch hired him when he was in New York working for the Financial Times.

The FT’s circulation in the U.S. was just 45,000 copies a day.

By 2002, U.S. circulation had increased to 150,000 copies.

He knows business media.

And he is the key editor behind the Murdoch bid for Dow Jones.

Today’s Wall Street Journal has an interesting profile of Robert Thompson that includes these paragraphs:

Mr. Thomson and Mr. Murdoch have an unusually close relationship, said people who know them both.

They share Australian roots and a birthday (March 11, 30 years apart).

Both married women from China and have young children. Wendi Murdoch and Mr. Thomson’s wife, Wang Ping, get along well and speak Mandarin to each other, say people who know them.

The two families have vacationed together.

Kim Fletcher, a British media commentator and former editor of the Independent on Sunday newspaper, said that sharing vacations represents an “astonishing closeness” between the newspaper owner and his editor.

“When Thomson was appointed [Times editor], he was seen to have come from nowhere because he wasn’t on the general newspaper scene — he was from a business-newspaper background,” Mr. Fletcher said.

Mr. Thomson grew up in a working-class family in the Australian bush and got his first full-time job at age 17 in 1979 at Melbourne’s Herald, an evening paper once edited by Mr. Murdoch’s father, Sir Keith Murdoch.

Mr. Thomson missed out on a position as a trainee journalist and became an errand boy instead.

A year later, he became a reporter.

At night, he studied for his journalism degree at the Royal Melbourne Institute of Technology.

In the early 1980s, he moved to the Sydney Morning Herald. Through a sharing arrangement with the Financial Times, the paper sent him to Beijing as a reporter.

In 1989, Mr. Thomson covered the crushing of the Tiananmen Square democracy protests by the Chinese army. He was in the square when a group of soldiers started beating up another reporter, Jonathan Mirsky of Britain’s Observer newspaper.

Mr. Thomson helped pull away Mr. Mirsky, both men recall.

(…) In 2004, the Times had an $89-million loss, according to a person familiar with its accounts. Next year, the paper is expected to make a profit, this person said.

“Rupert Murdoch gets little credit for seeing the Times through the difficult years,” Mr. Thomson said in an email. “It’s fair to say that we are famous for being a not-for-profit” organization, he jokes.

The Times has lost money for most of the time it has been owned by Mr. Murdoch, according to several former editors.

Tall, thin and with a slight stoop because of a back problem, Mr. Thomson is approachable and rarely shows anger, said people who have worked with him.

With a soft voice and an eccentric style of dress — he is fond of thin ties — he stood out in the newsroom, said people who have worked with him.

Not a bad editor.

For the old Times of London…

Or for the new Wall Street Journal.