Rupert Murdoch tried to convince Wall Street on Tuesday that there is still money to be made in newspapers, reminding investors that he had defied skeptics over the past 60 years to build one of the world's biggest media empires.
As News Corp prepares to separate its publishing business from its entertainment assets, Murdoch said that while some brands face individual challenges, as a whole the publishing portfolio is "undervalued and underdeveloped."
"I am not saying I didn't make many mistakes along the way —even some spectacular ones," Murdoch said at a meeting in Manhattan to sell investors on the new publishing company.
"You may be wondering why I want to do it all over again," the 82-year-old media mogul said. "The simple answer is: there is opportunity everywhere."
The new publishing company, which will retain the News Corp name, officially kicks off on June 28 with properties such as: The Wall Street Journal, Dow Jones Newswires, The Times of London, Australian pay-TV services, book publisher HarperCollins and fledgling education unit, Amplify.
The spin-off comes as newspapers face plunging advertising revenue and readers who increasingly prefer to get news for free on their smartphones and tablets. Shares of newspaper companies - once considered blue-chip investments - have tumbled over the past decade as investors fear a permanent drain in ad sales.
Against this backdrop, the publishing company's new chief executive, Robert Thomson, said there will be "relentless" cost cuts in store for the business. He gave no specifics.
News Corp executives took pains to note almost half of the publishing company's revenue comes from sources other than advertising. One revenue source is Dow Jones, which sells news and information to financial institutions and competes with Thomson Reuters Corp and Bloomberg LP.
Dow Jones CEO Lex Fenwick highlighted the introduction of a new platform, code-named DJ X. He emphasized one product, one price and one standard contract.
"If we can take a little more of institutional spend with DJ X - if we deliver that product with real value, there's a real opportunity to increase our market share," he said.
Fenwick also said Dow Jones is working on a messaging platform to compete with Bloomberg's vaunted product.
CLEAN BALANCE SHEET
Thomson, a close confident of Murdoch, ensured the new publishing company would start out with a clean balance sheet, no debt and $2 billion in cash to buffer operations and attract investors. News Corp intends to pay a dividend, but the board has yet to determine the details. It said it has authorized a share buyback of $500 million.
Still, analysts wanted to know if Murdoch intended to go shopping with his coffer of cash especially where newspapers assets are concerned - including the Los Angeles Times and the Chicago Tribune that are on the market.
Murdoch said if the "price is right" News Corp could be interested in newspapers. But he said that cross-ownership rules that prevent companies from owning top TV stations and newspapers in the same market made it "pretty unlikely."
News Corp said last Friday that it would write down the value of its Australian and U.S. publishing assets by up to $1.4 billion, potentially wiping out the company's estimated profit for the quarter ending June 30.
Thomson said the company will have "a permanent start-up sensibility." He added, "We will be relentless in our cost-cutting and in our pursuit of profits."
The new News Corp also unveiled its logo - written in a cursive script based on the handwriting of Murdoch and his father, Keith, whose Australian newspapers were the seeds of the media empire.
The Fox network, the movie studio and a set of lucrative cable properties will become a separately traded company called 21st Century Fox.
"I have been given an extraordinary opportunity most people never get in their lifetime: the chance to do it all over again," said Murdoch.