News Corp.’s Fabled Subscription Plans a Month Away

Remember Rupert Murdoch’s plan to convince other media companies to join him behind a pay wall and offer their stuff only via subscription? It’s still around, in some form. We’ll hear more about it in “three to four weeks” Murdoch said today during News Corp.’s earnings call.

Just what Murdoch has in store isn’t entirely clear. Last year, he sent digital media head Jon Miller out to convince rival newspaper publishers to join News Corp.’s Wall Street Journal in the pay-to-play ring. But it appears that Murdoch may now be thinking of a subscription offering that extends beyond newspapers and into entertainment.

I’ve asked News Corp. if it has anything to add to Murdoch’s hazy comments this afternoon, but I’m not optimistic. I do think we’ll hear more about this before the press conference Murdoch plans for later this month, though.

Meanwhile, here’s some background on “Project Alesia,” the subscription/pay wall plan that may or may not be what Murdoch was talking about today.


We’ve seen the numbers, so we know that News Corp. had a very nice quarter. Now let’s hear what Rupert Murdoch has to say about his company’s performance. I’m also interested to see how much ire Murdoch expresses for Google (GOOG) and how much ardor he has for Apple’s (AAPL) iPad, among other digital topics.

The following is a live paraphrase that includes my editorial notes; I’ll note direct quotes where appropriate.


Dave DeVoe going over numbers from the release.

Earnings include one-time items of three cents per share. [Should net that out of earlier reports when comparing to Wall Street expectations.]

Newspapers: Operating income up nearly five times. Higher advertising across nearly all markets. Forex helps, too.

“Other” (includes Myspace): Lower search and ad revenue, but costs are down.

Some balance-sheet talk: We’ve got a lot of cash on the books, and we know it. Some of it will get paid out to Jim Cameron and other participants in “Avatar.” But we’re working on ways to deploy the extra cash. We’ll get back to you on it by the next quarter.

Guidance: We’ve done better than anticipated in lots of our business for the last nine months, but our next quarter will be down. That’s because we expect the film business to be down $100 million, even including “Avatar” DVD releases (reason: We had very good quarter last year). Also, Fox Broadcast will be down. So we’re only bumping up guidance a bit.

Rupert Murdoch:

Exceptional results, “pretty much across the board.”

We’re psyched for five reasons:

1. Content. Really important, and we’re really good at it. Shout-outs for “Avatar,” Fox News Channel, newspapers, TV shows. “Fortune favors the bold,” etc. “We have the no. 1 national newspaper on all three continents.”

2. Technology: We’re good at that, too. The Apple iPad, “which I believe will lead a revolution in content consumption.” First month, 64,000 active users for The Wall Street Journal iPad app. “Unlike the Kindle, we keep 100 percent of the subscriber revenue from the iPad.” Innovative subscription model coming to deliver content to people whenever they want it (paging Jon Miller, James Murdoch).

[Apologies, lost the thread here. But Rupert is gung-ho about TV and other core businesses]


Is there concern that you can’t keep growth in the next fiscal year? Can you?

Murdoch: Absolutely! Hedges on numbers. “We have a great slate of films coming up, but we don’t have an ‘Avatar’ in there.” If ad growth keeps up, “I think we can be very confident.”

COO Chase Carey: I agree! The ad market is actually picking up. Sports has been a little slower than other ad markets, and they’re now picking up. “Looks great.”

Question for Devoe: Please talk more about that big cash pile.

Murdoch: I can answer that! “We’re well aware that our balance sheet…is inefficient at the moment.” Increased dividends, stock buy backs, investing in our businesses, possibility of “opportunistic investments,” which we’ve been “nervous” about doing in past year but now we have some things we’re looking at. Cue M&A klaxons!

More color on the TV biz, please.

Carey: Strong recovery in most categories. Not just auto and telecom. Financial, insurance, all sorts of stuff. “It’s pretty broad.”

Murdoch: “We’re seeing pretty optimistic and expanded advertising budgets from the big advertisers.” Not sure when that money is coming, but would guess Q2, when they’re launching new cars. “There’s a lot of money out there on the boards.” And as free over-the-air audiences shrink–and ours is shrinking less–that money is finding its way to cable. So any show that can show any sort of advertising can attract money. “It feels good; that’s all I’m saying.”

Please talk about new retrans/carriage negotiations.

Carey: Fox News deals starting to come up. Will be staggered over a couple of years. “I think the Fox News network…is certainly–maybe with ESPN–second to none.” So pay up, cable guys! (And customers!)

Carey mounts a long defense of Sky Italia. I’ll refrain from transcribing.

Similarly, you’re probably not interested to read what he has to say about satellite TV in Europe.

Netflix is killing it. What does that mean for you guys? Good news because it says good thing about your library? Or maybe an opportunity for you to do more with your library?

Carey: Noncommittal answer. But: “There is a question whether the Netflix model is getting us fair value for our product.” So we’ll keep looking at windowing content and whether we’re getting paid enough for our stuff. “I think it’s a focus.”

Please talk about Fox Audience Network plans and MySpace/Google plans.

Carey: Google plan doesn’t affect FAN. Not going to comment on “rumors.” “I don’t think that’s productive.” But! The key is to build enough traffic to attract enough dollars. FAN has a done a good job.

Let me try to re-ask the same question regarding restructuring or spinoff of FAN.

Murdoch: Praises MySpace. In the past few years “we made some big mistakes,” but we have fine new management now. “Early indications, and they’re only indications, are that we’re getting new visitors, and they’re staying longer,” so ad dollars will follow.

[Sorry missed this question, but I believe it is about guidance.] Murdoch is not talking up the film slate, but indicates that he’s spending a bunch of money on movies, and the company will take hits on those initially before they see dollars come back.

Carey: The film business fluctuates from quarter to quarter. But our team is great, and we have great movies coming. “We couldn’t be more excited and positive about the film business.”

Murdoch: Our movie investors praise us.

Any film properties you’re interested in?

Murdoch: “We’d look if something real came onto the market,” but we don’t put MGM in that category, at least not at the price it’s asking. We prefer to invest in our own stuff, and that goes for TV shows as well. “Glee” is a big hit and we own it. Same goes for “Modern Family.”

More info on digital, please. What about MySpace profitability? What happens when Google deal ends w/MySpace?

Carey: “Clearly, MySpace is a work in progress.” [This is a familiar refrain.] But promising signs. Talking up “Glee” tryouts. Improved the platform, etc. By the end of 2010, we want a foundation installed that we can go forward with, and we want to have a cash positive business going into 2011. “The trends are better but they’re not what they need to be….A number of the key metrics are not going up, but they’re better than what they were.”

Are you getting retrans fees for Fox broadcast now?

Not yet.

Why isn’t TV station top-line growth showing up on overall segment results?

Has to do with way we present results. [Confusing and confused discussion about bookkeeping ensues.]

[Still going!]

Press Q&A! (Usually much more entertaining)

Question about Australian news story about…mining?

Murdoch: “Nothing to do with media.”

Same guy has a question about Australian football (?). Rupert professes shock about whatever the scandal was.

Eighty-one advertisers bailed on Glenn Beck. Now it seems as if the only ads are in-house and for gold. When will you stop subsidizing the show and require it to carry its own weight?

Rupert says the 81 number is wrong and that Glenn Beck show doing great.

More color on that subscription model, please.

Rupert: Press conference coming in three-to-four weeks.

But: We’re getting about $4 a week for The Wall Street Journal… [voice trails off].

So this would be about entertainment as well?

Oh, you bet. Everyone’s been talking about negotiating with Apple.

[Both Rupert and FT's Ken Li seem confused. Me too.]

How much did you invest in Wall Street Journal New York edition?

Rupert. “Happy to tell you. We invested nothing.” Maybe $1 million in it. But ti already covers its costs. The notion that we’re spending $30 million on it is “BS.”

[Sorry, missed next two questions.]

Soon to-be Murdoch employee Claire Atkinson has questions about TV ads and online video ads.

Murdoch: is up 11 percent. $100 million in digital revenue at Dow Jones. At Fox, “absolutely thriving.” [If he answered TV question, I didn't hear it, but I think he passed on that one.]

That’s all, folks.

Fox News Had Highest Quarterly Profit In Their History

Fox News got a shout-out again in the News Corp. earnings report, out today. The network didn’t just have its best ratings ever in the last quarter, they also had their highest profit.

News Corp. CEO Rupert Murdoch was on FNC’s Your World today to talk about the news and other stories.

Here’s the Fox News section of the News Corp. earnings report:

Cable Network Programming reported strong third quarter segment operating income of $588 million, an increase of $162 million over the third quarter a year ago. This 38% growth primarily reflects double-digit contribution increases from the FOX News Channel (FNC), the Regional Sports Networks (RSNs), FX, the Fox International Channels and STAR.

FNC achieved its highest ever quarterly profit, increasing its operating income 31% over the third quarter a year ago primarily from affiliate revenue rate increases and higher advertising revenue while maintaining its cost base. Viewership at FNC was at its highest level ever during the quarter with ratings 188% greater than its nearest competitor in prime-time and 157% higher on a 24-hour basis. For the second consecutive quarter, FNC had the top thirteen shows in all cable news.

Murdoch was a guest on Your World, and the interview re-airs at 6pmET on Fox Business Network and Cavuto’s other show. He was first asked about the earnings. “I wish they were always like that,” he said. “But, you know, we’re comparing with a pretty bad year.”

As for Fox News, he briefly touched on White House relations:

Very good. I was down there on Saturday at the White House Correspondents Dinner and I had very friendly word with several of the staff there…I’m sure they don’t like Fox News, of course, or The Wall Street Journal, but we have a very civil, personal relationship.

Here’s video:

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Shepard Smith Questions Justice Dept.’s “Revisionist History” On Times Sq. Bomb

While the aftermath of the attempted Times Square bombing has been overwhelmingly positive, the frightful possibility of a successful Times Square bombing was still looming over Studio B, where Shepard Smith repeatedly emphasized that the good news on Sunday morning could largely be attributed to luck, and that claiming the t-shirt vendor heralded for calling the police “thwarted” the bomb was simply “not true.”

Covering the latest Justice Department press conference with Fox News correspondent Catherine Herridge, Smith repeatedly emphasized that the bomb was faulty, police were notified of the suspicious vehicle only after the bomb’s detonator had failed. In his opinion, Attorney General Eric Holder was giving too much credit to the civilian who notified the authorities as the bomb had already “gone off” when he called the police. Holder had stated that the alert bystander “helped save lives, and thwarted a potentially devastating attack,” to which Smith replied: “this bomb was not thwarted– this bomb failed.” Smith’s issue was not with the civilian, who he praised, but with the federal authorities, which he speculated wanted to be able to use the instance as proof of their successes in the future:

“I can think of a lot of different reasons that they would want this. For instance, down the road, next time something happens, they can say ‘we thwarted Christmas Day’ and ‘we thwarted Times Square,’ but that wouldn’t be the case. And part of our job, I think, is to not allow revisionist history to take over.”

It’s worth noting that Smith also reserve praise for the Justice department – and Holder – for the successful efforts to apprehend the individual alleged to have tried to blow-up an S.U.V. in Times Square. But he made very clear that, in his eyes, this was not a thwarted effort, but a failed one.

Watch the clip from Studio B below:

Arrests In Pakistan Come As Times Square Bomber Starts Talking

With Shahzad Faisal now in custody and set to be charged, the Times Square car bomber is talking – and arrests are taking place in Pakistan.

We first heard it was one man, than another, and now as many as eight who have been arrested, with the implication they are taking place because of Faisal.

Fox News was the first to report on the arrest in Pakistan, just after 12:30pmET (MSNBC was about 10 minutes later and CNN another 10 minutes after that). An FNC interview between Megyn Kelly and Michael Balboni, former Homeland Security adviser for New York, furthered the story. Said Balboni: “There is a suspicion that at least two of the individuals arrested in Pakistan are related to him and may have provided support or training in some way shape or form.”

As news continues to break on this story, cable news as a whole becomes invaluable for disseminating the most up-to-date information. And the reason the story is so fluid is because the government, from New York to the national level, is acting incredibly quickly. As Shepard Smith noted during Studio B on Fox News, “Everyone who’s looked at all the facts is very impressed.” (Well, everyone except his colleague Peter Johnson, Jr. apparently, and if history is any indication, likely others at Fox News and on the right).

Here’s Kelly’s interview with Balboni from the 1pmET hour:

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Fox News Analyst Calls Times Sq. Bomb Incident “Astounding Intelligence Failure”

Well it didn’t take long for the politicization of the failed Times Square terrorist plot to start. Earlier today, Fox News analyst Peter Johnson, Jr. was a guest on America’s Newsroom and was not demure in criticizing the government’s role in failing to uncover the failed plot. Nevermind that the suspect was apprehended within 53 hours and 20 minutes of planting the bomb (according to NY Police commissioner Ray Kelly), or that nobody was injured. Instead Johnson felt it an appropriate time to criticize our country’s anti-terrorism efforts.

Glenn Beck Argues For Mirandizing Times Square Bombing Suspect

It was a packed curvy couch on Fox & Friends this morning, as Glenn Beck and Judge Andrew Napolitano joined the trio of co-hosts for a discussion on Miranda rights for the Times Square bomber.

The Judge naturally went the hardline judicial route, arguing he deserves to be Mirandized because he’s an American citizen, and Beck…agreed 100%.

The Right Scoop caught the exchange this morning, which featured a determined Beck squaring off against Brian Kilmeade, who wanted to make an exception. “He’s a citizen of the United States, so I say we uphold the laws and the Constitution on citizens,” said Beck.

“He’s a threat to the country, that’s different,” countered Kilmeade.

“If you’re a citizen you obey the law and follow the Constitution,” said Beck. “He has all the rights under the Constitution.”

Later, the money quote from Beck: “We don’t shred the Constitution when it’s popular. We do the right thing.”

It will be interesting to see if Beck expands on this theory on his 5pmET show tonight, which will surely dismay some of his conservative viewership. But Beck has proven himself to be a Constitutional stickler…even when, as he says, it may be unpopular (with his base audience).

Seeing Beck, who is notoriously tough on terrorists (including the Christmas Day crotch bomber), push so strongly for this terrorists Miranda rights highlights the discrepancy in his mind – when it comes to American citizens, the Constitution trumps all. Still, he did let a caveat slip in that in times of officially declared war, his mind could change.

On Twitter, Glenn Greenwald wrote, “What makes the Right’s yelling about Mirandizing even more twisted than usual is that the suspect is as much of a U.S.citizen as they are.”

Well Greenwald has found an unlikely ally in another Glenn.

Check out the segment:

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Sean Hannity Misunderstands Bill Maher’s “Racist” Republicans Comments

Whatever temporary good will Bill Maher garnered from his Friday monologue touting how much “better” Western culture was than that of fundamentalist Muslims, it was gone after his Sunday appearance on This Week, when he discussed the racism within the Republican party.

Last night FNC host Sean Hannity and his African American guests from both sides of the aisle tackled the issue.

The quote from Maher on This Week was the jumping off point for Hannity’s discussion:

I have never said, and would never say, because it’s not true, that Republicans, all Republicans are racist. That would be silly and wrong. But nowadays if you are racist, you are probably a Republican.

An important distinction (whether you agree with Maher’s point or not). Well here’s how Hannity asked the first question to his guests, directly after playing the Maher quote: “What he is saying, basically trying to advance the narrative that if you’re conservative, if you’re Republican, you are racist, right?”

No, not right. In fact, that’s the opposite of what Maher is saying. Again, it’s not that all Republicans are racist, it’s that most racists are Republicans. There’s a debate to be had about that point, but it was disingenuous for Hannity to mischaracterize Maher’s comments, and it set the tone for a debate not based in fact.

His guests were Star Parker, a conservative California congressional candidate and James Peterson, Bucknell University professor. They argued over which party was better for the African American community, and later discussed the racism they’ve felt from various sources. Peterson, who has been a guest on Hannity before, described what would happen after the segment was over. “When i get off your show tonight, I’m going to get a series of emails, and they will be racist emails, and they will be directed at me just for appearing on your show,” he said. Hannity suggested they compare emails one day – hate mail, fair and balanced.

Here’s the segment

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