Excuse the swearing but it really is a “Fuck me, Doris” story.
The News of the World is to shut and this weekend’s edition will be its last ever. The Guardian is live-blogging the coverage, the Twitterati are trying to come to terms with what is a very unexpected announcement, and you can read the News International statement here:
What does all this mean?
1. BSkyB is what really matters here
In the grand scheme of things, Rupert Murdoch considers winning the rest of Sky as a bigger prize than the fate of his newspapers, as much as he no doubt loves them.
News Group Newspapers, the parent group of NOTW and The Sun, made pre-tax profits in 2010 of £40.3 million, a 10 per cent drop on 2009, according to Companies House files.
Compare that to Sky with its long-promised 10 million paying households – a huge target met in spite of scepticism from the City – contributing to its £5.9 billion revenue and £855 million operating profit for the year to 30 June 2010.
In an interim statement in January (slides here), Sky CEO Jeremy Darroch announced H1 operating profit of £520 million – its best half-year performance ever – and earnings per share up 32 percent year on year. Sky is a genuine runaway British media success story and its creation and growth remains one of Murdoch’s proudest achievements. But the Sky share price is down more than £600 million this week thanks to uncertainty over the timing of the acquisition (at close of play yesterday it was down by an inauspicisous £666 million).
When you look at these numbers it’s not hard to see NOTW as a pawn in a bigger, more profitable game in which being seen as honourable owners of Sky is better than being dishonourable owner of a discredited newspaper.
The Indy quoted one Tory minister last night saying: “David Cameron is well aware of how damaging the issue of the takeover is to him and to the Government. There is real anxiety in No 10.” Murdoch is friends with Cameron but every friendship has a limit.
2. Newspapers are a small part of the News Corp empire
Murdoch loves print. It is, as every biographer says, in his veins. But at a corporate level the love is not shared. Here’s News Corp chief operating officer Chase Carey speaking at a UBS conference last year (via Forbes.com’s excellent Jeff Bercovici):
“We’re overly identified with the publishing business… Some of the concerns that exist around publishing, we get widely associated with. The publishing business has had too wide a profile… [Newspapers] are important assets, we care about them…but that’s not going to drive our future. Our future is being driven by those big, broad content platform channel businesses.”
Newspapers don’t even get their own heading in News Corp earnings releases – it’s “Newspapers and information services” meaning that includes Dow Jones’s data-led products too. Just 10 percent of profits come from newspapers compared to 50 percent from cable TV.
3. This isn’t the end of Sunday publishing at News International
It doesn’t take Mystic Meg to guess that NOTW may be replaced by a Sunday edition of The Sun – as long as there is an advertising market for a popular red-top newspaper, News International will fill it.
As a Guardian commenter points out, the domains www.thesunonsunday.com and sunonsunday.co.uk were recently registered (thought we do not know by whom).
But with its singular identity, culture of rivalry with The Sun and long tradition of scurrilous tabloid journalism and populist campaigning gone, whatever the apparently unsackable Rebekah Brooks chooses to replace News of the Screws with, British journalism will not be the same.
Also see my piece on how social media campaigning helped bring down the News of the World.