Advanced Television

King Content, King Rupert?

July 24, 2014

Exactly three years ago, Rupert Murdoch was wiping custard pie from his shirt as his now ex-wife struck out at his assailant in the House of Commons Media Committee room. Even before the pie, Murdoch had confessed it was the ‘humblest day’ of his life. The foam wiped away more easily than the inevitable impression this was a man whose leadership culture had ultimately led to industrial scale criminal activity in one of his most prized companies.

But Murdoch is no sentimentalist – despite his weirdly steadfast support for the manager who directly presided over the newspaper shambles. No, his biggest regret in the whole mess wasn’t that he had to close an historic newspaper, but that it had scuppered his deal to buy complete control of BSkyB.

How time flies, and how time changes people. You can’t help but be impressed with an octogenarian who takes his travails on the chin, has a bit of a think and comes back with an entirely new plan, almost a new philosophy.

The bid for BSkyB demonstrated that Murdoch still believed in the power of the gatekeeper; own an audience big enough, and affluent enough, and content has no choice but to go through you to reach that audience and leave you a nice profit. Win a subscriber, keep a subscriber, milk a subscriber again and again and again.

Even three years ago a lot of people thought that was a bit ‘yesterday’. OTT provision, in particular the success of Netflix but also the looming leviathan of Google, meant some thought the gatekeeper paradigm looked a bit shaky.

Not among them, obviously, is BSkyB which having ‘seen off’ Murdoch is now trying to buy his ‘duplicate’ Sky operations in Germany and Italy. This consolidation is also what Murdoch was after and it still makes a lot of sense. BSkyB is probably the best pay-TV operation in the world and it can doubtless produce a lot more from its much less impressive ‘sister’ operations on the Continent.

Ironically, Murdoch will take the massive cash bonus he will make from this takeover and put it in the pot for his unwanted bid for Time Warner. If he were to win, it would place Fox/Warner – (you can be forgiven if you have forgotten it was his rejected bid for Warner Bros. in the 80s that saw him undertake the breathtaking task of creating a fourth TV network in the US) – firmly in the Content is King camp.

Of course, if you’re in that game it is great if you have hits. And with a content factory that big, you’re bound to have some, but every quarter is a bet on the box office and the ratings. But then Murdoch is the ultimate gambler and many follow his lead at the tables – despite the fact his personality cult corporation has actually produced worse returns to ordinary shareholders than many peers. Will his lead mean gatekeepers will start getting back into content again all over the place? Virgin Media (that’s the recent seller of UKTV) is now touted as a bidder for ITV (when guess who sells his significant stake). Never a dull moment.

Categories: Blogs, Business, Content, M&A, Nick Snow, Pay TV