Wednesday, November 14, 2007

There is no free lunch, but there is a free newspaper

Murdoch Intends to Drop Fee

ADELAIDE, Australia, Nov. 13 (AP) — Rupert Murdoch, the chairman of the News Corporation, said today that he intended to make access to The Wall Street Journal’s Web site free, trading subscription fees for anticipated ad revenue.

“We are studying it and we expect to make that free, and instead of having one million, having at least 10 million-15 million in every corner of the earth,” Mr. Murdoch said, referring to The Journal’s online readership.

The News Corporation has signed an agreement to acquire Dow Jones & Company, and the deal is expected to close in the fourth quarter. A special shareholders meeting is scheduled for Dec. 13 in New York.

Mr. Murdoch said he believed that a free model, with increased readership for, will attract “large numbers” of big-spending advertisers.

The Web site, one of the few news sites globally to successfully introduce a subscription model, currently has around one million subscribers, which generates about $50 million in user fees.

Mr. Murdoch, speaking to shareholders in Adelaide, where he started his company from one newspaper that he inherited from his father, said that the company in the October-December quarter is performing ahead of full-year guidance, and that advertising demand in the United States has held up well despite problems in the credit market there.

“We are going very well and very strongly” in the current quarter, Mr. Murdoch said.

He said it was too early, however, to raise forecasts for the year and reiterated guidance for operating income growth in the low double digits.

The group has not been affected by any of the issues which precipitated the United States subprime mortgage market meltdown earlier this year, he said. Even if the advertising market were to be hit, the impact at the group level would not be huge, he said.

Around 23 percent of The News Corporation’s earnings come from the United States. Mr. Murdoch said it wouldn’t be “fatal” to see a 10 percent drop in advertising in the United States market as a whole.

In addition to Dow Jones Newswires, Dow Jones publishes The Wall Street Journal and its international and online editions, Barron’s, The Far Eastern Economic Review, MarketWatch, Dow Jones Indexes and the Ottaway group of community newspapers.

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