News Corp. (NWSA), which is severing ties with AllThingsD founders Walt Mossberg and Kara Swisher at the end of the year, objected to the terms of the journalists’ contract soon after the media company took over the operation in 2007, two people with knowledge of the matter said.
Mossberg and Swisher together take slightly more than 50 percent of AllThingsD’s conference revenue, including ticket sales and sponsorships, according to people familiar with the business, who asked not to be identified because the terms are private. The contract was originally negotiated years before News Corp.’s Rupert Murdoch acquired AllThingsD as part of his Dow Jones purchase, and he and other executives bristled at the arrangement, people with knowledge of their thinking said.
The AllThingsD website was begun a few years after the conference business started in 2003 and became a top source of news on startups, media and the technology industry. Even though executives didn’t view the contract terms as ideal, the arrangement was profitable for News Corp. and the company extended the partnership for three additional years in 2010, according to the people. Still, management didn’t expect the agreement to continue beyond 2013, they said.
Swisher disagreed with that characterization yesterday, saying in an interview, “I have no idea if Rupert was unhappy or not with the previous contract, but News Corp. negotiated a new one that they happily signed in 2010.”
The split leaves News Corp. without two of its highest-profile business journalists, while sending Mossberg and Swisher in search of new partners and investors. The pair said this week that they would have a new website and conference business starting Jan. 1 under a different corporate structure. Mossberg and Swisher have been in talks with two potential backers: Comcast Corp. (CMCSA)’s NBCUniversal and magazine publisher Hearst Corp., according to people with knowledge of the negotiations.
The talks with NBCUniversal included the possibility of creating a new technology show for CNBC that would be based on the same kind of coverage found in AllThingsD.com, two people said. The financial cable network has recently looked at ways to increase its coverage of Silicon Valley startups and businesses, according to people with direct knowledge of those discussions.
Mossberg and Swisher also are working out plans to bring along all of the current AllThingsD editorial and administrative staff and would give them an equity stake in the new venture, three of the people said.
Ashley Huston, a spokeswoman for News Corp., declined to comment on the company’s contracts with Mossberg and Swisher. CNBC’s Brian Steel also declined to comment, while Hearst’s Alexandra Carlin didn’t respond to requests for comment.
“While we can’t give any details yet -- and there are details -- you can assume that this new independent business will be laser-focused on continuing and extending Web journalism and conference journalism with the highest standards,” Swisher and Mossberg said in a statement on the AllThingsD site. “Plus, we will finally be able to have added resources, so we can grow in new and exciting ways, including hiring more journalists and doing much more video.”
News Corp.’s Dow Jones announced this week that Mossberg and Swisher wouldn’t be renewing their contracts when they expire at the end of this year. In their absence, Dow Jones said it will expand its technology coverage and conference business. Bloomberg LP, the parent of Bloomberg News, competes with News Corp. in providing financial news and hosting conferences.
In addition to his AllThingsD duties, Mossberg had served for two decades as a weekly technology columnist for Dow Jones’s Wall Street Journal. His column was a first-read for consumers deciding whether to buy the latest iPhone or upgrade their computer software.
The AllThingsD conference has been lucrative for the past decade, consistently selling out its limited 500-seat event every year with guests such as Apple Inc. (AAPL)’s Steve Jobs, Microsoft Corp.’s Bill Gates and Murdoch himself. While Mossberg and Swisher claimed a large chunk of the business, they managed all of its aspects, including wrangling speakers, hiring staff and editing the website, the people said.
Mossberg and Swisher have approached other media companies, including the New York Times, about a joint venture to create a similar conference under a new brand, according to three executives familiar with the matter.
Tickets to AllThingsD’s most recent conference, at the end of May, cost $5,500 each, for a total of $2.75 million. The event also takes sponsors -- such as Oracle Corp. (ORCL) and Sony Corp. -- which pay as much as $400,000 each, adding up to more revenue than ticket sales generate, according to two people with direct knowledge of the business.
The website only brings in about $3 million to $4 million in annual ad revenue, most of it tied to deals that also run across Dow Jones’s other sites, such as wsj.com, one of the people said. As a stand-alone entity, AllThingsD.com would generate about $1 million a year, the person said.
Dow Jones owns the AllThingsD brand, and the company declined to say what would happen to it. AllThingsD recently added two new events -- one focused on media and another on the mobile industry -- in an effort to expand the franchise.
Dow Jones Editor-in-Chief Gerard Baker said the publisher plans to expand the Wall Street Journal’s technology coverage and will extend its conference business to include an international event. He praised Mossberg’s contributions to the publication.
“I want to offer heartfelt thanks for more than 20 years of Personal Technology columns as well as his very fine reporting on national and international affairs in the years before he turned his attention to technology coverage,” Baker said in the statement.
News Corp. split off from Murdoch’s entertainment business, now called 21st Century Fox Inc., earlier this year.
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