Rupert Murdoch Interview Transcript

Rupert Murdoch Interview Transcript

At the McGraw-Hill Cos. Media Summit in February, BusinessWeek editor Steve Adler asked Rupert Murdoch specifically about News Corp.'s interest in Dow Jones, for which Murdoch is now offering $5 billion. A transcript of the entire conversation is posted below.

Adler: You have expressed in the past interest in purchasing Dow Jones. You did a very intriguing interview with Holman Jenkins on the off (Inaudible) page of the Journal some time ago where you talked about how valuable it could be, and you seemed to talk about the need to spend for quality. If it were for sale, are you still interested in Dow Jones, even the way newspapers are going?

Murdoch: Well, I must say I'm cooling on it, I worried about it. But I do think that I would do something different to what they have done. They said, "Look, if you want normal Wall Street Journal stories, and as they happen, you can just go to the Web and you get it as they happen during the day." That's all right (Inaudible) time, but then taking it out of The Journal, and having a lot longer analytical stories somehow has taken all the urgency out of it, and excitement of reading it. I find more and more…I look at it and say, "Yes, I should read that", and I put it aside to take home that night to read, and too often don't get back to it. I think The Journal's opportunity has got a wonderful brand, and is to really go after(?) The New York Times nationally, with much more world, you know, significant world and national news. This is me theorizing about it. I don't think we'll ever get it, I don't think they'll ever sell it, and there would be a lot of constraints on doing so, too. I mean, this is a very unpopular thing to do with shareholders.

Media Summit New York 2007Sponsored by The McGraw-Hill CompaniesRupert Murdoch with BW Editor Steve AdlerFeb. 8, 2007

SA: Well, it's really great to have you here.

RM: Thank you very much, Steve. Nice to be here.

SA: I'd like to sort of move in our conversation a little bit from old media to new media, and start with newspapers, if we might. I think you're the largest newspaper publisher in the world, and yet clearly this is a slow growth business, but it's now been in the news that you're part of the Chandler bid for the Tribune Company, and can you talk to us about how you see the future of newspapers, and why you want to be part of a Tribune Company bid?

RM: Yes. I think they're very vulnerable. We're worried, and working very hard with all our newspapers. And we have to learn to look at them quite differently, I think as you were doing with your magazine. You know, we have a great trademark, a great service with each newspaper, we hope, and we've just got to be neutral about what platform we sell them on, or deliver them on. As for the Tribune name, I don't really believe it's going to happen, I don't think it's going to happen. We were willing to go along, and I wanted to go along for a little bit of it. If out of that we can pull a joint operating agreement for Long Island Newsday and The New York Post, which would give us real supremacy here, we'd have way (Inaudible) circulation in the New York area, and we thought, you know, whatever happens over the next 5 or 10 years, that would be a very good operation to have. And so we don't want the whole thing.

People have asked me, you know, "Would I go in and do the whole thing, or take half of it," and it scares me. The point about newspapers as they stand at the moment is that young readership is going down. The old family lifestyle of having breakfast over the newspaper, and fighting over it is gone. That's partly women being in the workforce, kids being in a hurry, and getting other sources of easy news. I regret it because a whole newspaper, and to read it sort of, go through it gives you an opportunity to learn a lot of things that you didn't know about, and if you were to say "My Yahoo! was (Inaudible)" you'd miss an awful lot of information, which could be useful to you.

SA: So as a business matter, are you thinking about selling off some newspapers because of the slow growth?

RM: No.

SA: No?

RM: No. You know, we're said to have a lot of newspapers. The truth of the matter is we don't. A vast number of those papers are small and medium-size suburban weeklies in Australia. We have the major circulation paper, at least, in every state capitol, about five pages(?) in Australia, and we have The Post here, and we have The Times and The Sun in London, which are very major papers and major businesses.

SA: Just to be very local for a second, is The Post ever going to be a really viable business in New York?

RM: Well, if we could pull up this Newsday deal, it would be in five minutes. I would think so. We're the only paper that's put on circulation, and particularly when ABC gets more active our competitors I think will be (Inaudible)…the leading paper here, and we'll get more retail advertising. The problem is other things are happening, too, in the market place, the discounters have put the old department stores out of business so you don't get these multipage advertisements every day from four or five stores. The economics are getting more difficult for newspapers all the time. Their putting the price up simply, you know, hurts the circulation.

SA: The strategy of a lot of newspaper companies seems to be around cost-cutting right now. The Wall Street Journal just shrunk the paper to save something like $18 million, The New York Times is about to shrink its paper. Is cost cutting the right approach for people in the newspaper industry?

RM: No, I don't think so. I mean, it's okay there's some business cost cuts, like to shrink the size of the page in The Wall Street Journal makes it, to me, more readable. I like that. That's fine. I don't believe how big of an economy it is. They've had to make it up to the journalists, or to keep the coverage up. They've dropped a huge amount of their stock pages which is the quite thing to do. People today who are following the stock market follow it minute by minute, or hour by hour. They don't need to wait until tomorrow morning to find out how their stocks are doing. The New York Times dropped their stock pages I think without warning one day, and I didn't hear any complaints. It's a change. They put a little ad on page one, they did some distribution, whatever they can. I think they can get economies there if they can keep up their revenues, they can get economies, which still probably wouldn't justify the current share price. I mean, they're worth having, $40-$50 million a year.

SA: You have expressed in the past interest in purchasing Dow Jones. You did a very intriguing interview with Holman Jenkins on the off (Inaudible) page of The Journal some time ago where you talked about how valuable it could be, and you seemed to talk about the need to spend for quality. If it were for sale, are you still interested in Dow Jones, even the way newspapers are going?

RM: Well, I must say I'm cooling on it, I worried about it. But I do think that I would do something different to what they have done. They said, "Look, if you want normal Wall Street Journal stories, and as they happen, you can just go to the Web and you get it as they happen during the day." That's all right (Inaudible) time, but then taking it out of The Journal, and having a lot longer analytical stories somehow has taken all the urgency out of it, and excitement of reading it. I find more and more…I look at it and say, "Yes, I should read that," and I put it aside to take home that night to read, and too often don't get back to it. I think The Journal's opportunity has got a wonderful brand, and is to really go after(?) The New York Times nationally, with much more world, you know, significant world and national news. This is me theorizing about it. I don't think we'll ever get it, I don't think they'll ever sell it, and there would be a lot of constraints on doing so, too. I mean, this is a very unpopular thing to do with shareholders.

SA: Yeah. (Laughs) Let's turn from newspapers to an already somewhat oldish media satellite TV. You just got out of the satellite TV business in this country. You have serious interest in it elsewhere. Can you talk about how you see satellite TV competing against cable and the phone companies coming in? Is it viable in the U.S., is it a good business, and how do you see it U.S. vs. abroad?

RM: Well, on the short-term, direct is improving its service, it's wonderful. In another less than 12 months, by the end of this year it will have everything but the standard(?) definition, any high definition. And it's got to trade up in the quality of their view. I think they'll do very, very well. And then we're going to see their costs come down, the boxes they give away and put into the home. The new HD box with a DVR attached now costs about $500. That will be less than $300 to them within a year. And when they put that in, their churn drops by about 50%. So a lot of little things to say, they're going to have two, three good years. The problem is broadband. They cannot deliver broadband, and, you know, there may be some great technological breakthrough. I don't think it's YMX(?), I don't think it's got the power to really compete with the cable, or with the telephone companies. At the moment we've just seen Verizon starting up very expensively, but really only going after the sort of low-hanging fruit, and not much effect. But I think the appeal of the triple play, which may become the quad play with mobile phones is going to be very, very hard to compete with. Now, that doesn't apply to us in (Inaudible) where the European commissioners makes a pretty permanent ruling. The last (Inaudible) into the home, the local phone company's got to carry you. So if we put a fiber, which we've got now, fiber networks throughout Britain, which we're extending out, that can take sort of the long tail, they can supply the Internet, everything you normally get today on broadband, but you'll still have a massive hundred of channels of high definition coming out of the sky, and we'll put the two together. We have telephony, of course. I think we're in a very, very strong position. But you already signed up more people than anybody else, other than British Telecom for broadband, and they only announced it a few months ago.

SA: Mm-hm. But in the U.S. you're glad you're out of it? You had some…

RM: We can't do that here is the problem.

SA: Yeah, right. So you don't have those capabilities, but I think you also were concerned when you got into about having to rely on cable companies as kind of the gatekeepers, or guardians for your content. Are you less concerned about that now, or is it just something that you're (Inaudible)?

RM: No, we think our content is pretty well established. We'll be pushing it go, you know, further established, (Inaudible) with it. But we have about as many channels as we need. I mean, we're opening smaller channels, sports channels such as one for the Big 10 colleges, all of which, you know, you can say it's niche, but it's pretty big niches that they fill. There is a lot to do still in television here, but those sort of things the cable companies pretty much have to have.

SA: Speaking of TV, I really wanted to see if I could press you a little bit on the Fox Business Channel. There's been so much speculation about that. It seems as if from the reporting we could do that it was somewhat controversial within your company. CNBC is so dominant, it's been a very cyclical business when the markets are up, everybody's excited about looking at market coverage, when they go down they're less excited. Why did you decide to go ahead with that, and how are you going to differentiate that from CNBC?

RM: We think there is a great opportunity there, I've always thought so. We all agreed, and wanted to do it, and then about (Inaudible) there's a bit of nerves in the company we held up, but we are going ahead, we will be on the air this year. We just go up the road desperately building out studies for it. So sometime in the fall we will go to air, and we will be announcing shortly. We're not going to announce too much detail on the programming because everything we do at CNBC immediately will copy. (Laughter) Not perhaps everything, because we want it to be a little bit more business friendly, I think, the CNBC has been, you know, they leap on every scandal, or what could be a scandal, and we won't ignore them, of course, if they're genuine stories, but it's just an atmosphere to it that's sort of a negative, I think. So we think there is a real opportunity there.

SA: And you've actually the launch next week, I think I read. Is that true? You're officially going to announce the launch of the channel next week or…? You just announced it, so…

RM: Within the next seven days.

SA: So it's public?

RM: Yes.

SA: Okay. (Laughter)

RM: There will be more detail coming.

SA: Okay, great. On another TV…

(Background Conversation)

SA: Let's stick with TV a little bit. My Network TV was one of the disappointments in the earnings report that came out yesterday. Why isn't that doing better? You have this telenovela approach, it seems to not be getting good ratings. What's going wrong, and how can you make that work better?

RM: Well, I think our execution of it was not great, and, you know, was something quite new. The fact is we had eight stations, which were the lead stations, practically, everything called UPN. That closed, and were put into CW. And we cease to have NCW-owned affiliates in all those eight places. So we thought we had to come up with something rather than just old repeats. And we thought that this could work. Maybe they weren't good enough, or daring enough. Anyway, it hasn't worked. So we did something else, it's as simple as that. You know, in the overall picture, it has its (Inaudible) is having a very good rise in profits, we can afford to make, thank God, one or two mistakes, not too many.

SA: Okay. There was a feeling, I guess, that people were being asked to make a commitment every single night to these telenovelas (Inaudible).

RM: (Overlap) Yes, which have been very successful in countries in our industry, and are extremely successful here, I believe on the Spanish stations. But it was also too big a change. There are really programs appealing to women who watch these things normally, and the old UPN had been a very male, and probably minority, audience.

SA: So they weren't ready for that dramatic of switch?

RM: No.

SA: Uh-huh. Yeah. Okay, let's make a leap into the digital space. Your purchase of MySpace at the time shocked a lot of people, to spend $500 million on something that at the time people didn't even quite get what it was, and you had what seemed to be a fickle youth audience that had jumped from Friendster to MySpace, might jump to something else. Why at the time did you think that there was a real business there? What was your thought process in getting into that? Because you had been way ahead of people (Inaudible) stuff.

RM: You know, the timing was pretty clear two, two and a half years ago. It's suddenly became apparent to me that we were living in an absolute booming economy, and print advertising, and for that matter television advertising was not growing at the rate it normally would have in the past. I mean, you only had to look at where the money was going. There was a lot of money going into that. So we said, "It's time to move seriously." So we looked at dozens of things, and we came across this little company called Intermix which had, I don't know, half a dozen sites of varying success. Except standing out in that was MySpace, which had grown in months from nothing to 20 million of registered people, and was growing faster all the time. So we decided to take that.

We thought it would tie in also with Fox Sports, which has a very large, young audience, and it took off. And then actually it only earned 51% of that, but they had a firm option to buy the other 49% from the founders for $70 million, so we really paid $650 for it, and you can discard…we might be able to sell the other little sites for a total of $100 million. And it's grown faster than we've expected. We've had to almost put the brakes on it and say, "Look, we're physically just handling this traffic, and it causes…and we just need a lot more (Inaudible), a lot more service," putting up serving farms(?). It's not a vast amount of money, $50-, $60-, $70 million, which I think we'll have to repeat again very quickly, but we're now worth $150 million, that was two weeks ago, and was going(?) over $2 million a week.

SA: Kind of a good problem to have, right?

RM: Twenty percent of it, perhaps a little more an hour is coming from our new markets in Britain, and France, and Germany, and Italy, Australia. We're number one in Britain already, and it's extraordinary. And the advertising has gone from basically nothing to…well, on a net basis say $25 million a month, but growing every month. It's grown by almost 30% every quarter. And then next year we'll be kicking in with a research revenue from Google. So, you know, we think that MySpace, or together with IGN and without Fox Sports, you know, we'll be getting very close to a billion dollars of revenue.

SA: I mean, the rap against it initially was there's no business model, and then you did the Google deal, and people said, "Aha, okay, there's an advertising model," and now we think to the extent there's a rap, it's that the audience is maturing, you're already getting older people, and you have fewer younger people coming in, because there are very low barriers to entry, and it's a fickle audience, a lot of people are moving to Facebook. So are you worried about how quickly that audience moves from one thing to the next?

RM: No. We don't think they are. We think a lot of young people, or college kids, are undoubtedly going to Facebook, but they stay with us. I think what if people are on two site? You know, Facebook, if you're a college student, you pretty much need it. And it doesn't mean that they don't stay and enjoy all the things that you can get. And we had to be very, very competitive. For instance, when Google bought YouTube, and politely they refused to share it with us, we just went down there and said, "Listen, we've got to really work at our video site," and we go to our best engineer there and they worked night and day for a week, and now we've got…you know, we're very clearly the number two (Inaudible) and probably have 60% to 70% as many uploads as they do.

SA: Mm-hm. Do you think it was some sort of breach of faith for…

RM: Some people say we have more, but we don't believe that ourselves.

SA: Were you angry, do you think there was some sort of breach of faith for Google to, which was your partner, to go off and essentially become a significant competitor?

RM: Yeah, I think it's coming less and less. I might have overreacted. We thought, "Well, you know, we're just signed up, and it's a big deal, and we're the great social site," and suddenly they bought a big community site. Well, if you look at it, and look at it carefully it's not much of a community site. It's an experience, and it can be quite hypnotic, to take a look at it. Hard, I think, to monetize it. If you interrupt that flow of videos with commercials they're going to be over to us, or be somewhere else very quickly. But we'll be following that very closely. Yeah. I mean, there are big problems involved in this, mainly the one at copyright. Viacom has done…NBC has made some very hostile sounds, and I wouldn't be surprised to see a lot more people, or limit it(?), say, "Well, you can have a two-minute clip, that's fine. Don't go putting in our whole programs."

SA: Just one more thing on MySpace. A lot of concern about safety. I've got teenage kids, many people are looking at that issue, and there's a feeling out there that Facebook is much better on the safety issues, and in fact, there are some schools now recommending, or telling their kids they shouldn't be on MySpace, they should be on Facebook. What are you doing about safety, and have you actually conquered that problem, or is that still something that parents should be concerned about?

RM: Yeah, they should be. We absolutely are doing everything we can, and limiting the age in which they can come on. Can you tell whether they're lying or not? That's very difficult. We try and get parental approval of it. We have all sort of parents, and civic(?) associations around the country I think working at this together. We're doing everything we can. It is a problem but, you know, that's (Inaudible) would be. I mean, when Match.com started, you know, the first part they had a rape and a murder, and you've got to face this. It's an open society, and you do very (Inaudible) controlling, and you do everything you can.

(Overlapping Voices)

RM: And just keep warning people all the time, don't give away, particularly if you're a young girl, don't give away anything which could trace you, like don't say what high school you're at, or even don't say what post code you're in, and then say, you know, you're in the swimming team at the high school there, or whatever. You know, and we keep these warnings going, and I think people, they're all getting wise to it.

SA: One other Internet property, I want to talk about IGN. You bought that for $650 million, and there's some feeling it's not kind of taking off. It certainly hasn't grown as much as MySpace, and why is that, and do you have concerns about it, plans for it?

RM: No, not at all. It is, so you know, (Inaudible) MySpace, which is a worldwide phenomenon. But we had, in terms of page views, I think I might (Inaudible) uniques certainly well over 100% the last quarter on a year before. We've seen a lot of activity grow since the launch of PlayStation 3. You know, we've had a sort of dull period in the games business. Now I think the new Nintendo box and the PlayStation 3, the whole game seems to have come alive again. So we're pretty with it. Certainly the time people are spending on it, the number of people going to the uniques, they're all up well over 100% in the last three months.

SA: So overall on the Internet I think your Internet revenue is going to be still only something like 1% of your corporate revenue. I may be wrong on that. Do you have a target in your mind for three to five years from now? How much of it should be digitally driven?

RM: It depends on what else we do. But I guess we certainly would be looking at, in terms of these independent sites if you like…not newspaper sites or Fox News sites, okay…we certainly think it would be…well, even though we're growing the other segments of the business, too…over 10% of the business. And would be probably the biggest profit driver that we'll have. You know, we're dealing in new territory here in the Internet. Everything is changing every day. So one has to make a lot of assumptions that we're going to make things right, that we act properly, and stay in front of the game. But if we do, there is no reason why given time we won't see the revenues grow to $3 billion to start with, and then beyond that.

I mean, for instance, we just started six or seven weeks ago with Cingular here, making MySpace available on Cingular for $3 a month. We share the revenue. In that case it's two to one for us. We're about to start…it was in the press today…with Vodafone in all their territories…on a slightly different split, and a slightly different price…but in the case of Cingular, in six or seven weeks there were 200,000 people signed up. They said they've never seen a service grow so fast, and be introduced so well. I think the telephone, you know, it is the great platform that's coming. We're doing a lot of other things with that, too. We're taking over control of this company, Jamba(?), we will be putting…that started with, you know, selling wind turns(?) and people joining clubs. Now, you know, we've been putting on like the best Simpsons show this week, or whatever. All the telephone companies, mobile companies are looking for content to sell, or content that will cause people to come into them because, you know, they see the price of voice just going down and down and down. And we think there is a huge opportunity there. You know, there are twice as many mobile phones as there are computers. I may be wrong, there may be three times as many. In China there's 400 million and it's growing by several million a month.

SA: Yeah. I think China Mobile itself has 300 million (Inaudible) subscribers, yeah.

RM: That's right. Well, certainly we're doing business with them. Whether it's a MySpace, or if it's something else, is not determined yet.

SA: So just to get some clarity for the investors in the room, you're saying that you're imagining that you're going to have something like 10% of your revenue will be from Internet and digital, broadly, in something like five years? Just broadly that's how you're thinking?

RM: Yes.

SA: Roughly. Okay.

RM: But I would think that, also…and there will be an account for it, it goes to the separate publications and so on…but you're going to find, whether it's The Times in London, or The Sun, or The New York Post here, you know, a minimum of 10% of their revenues coming out of that. Even our little local television stations, and particularly the small ones all have Web sites which are pure community service. Other people have done this, have added 15% of the total revenues in the last couple of years, and we're going, you know, as hard as we can.

SA: You talked in the past, I think, about how you believe that the local Fox stations are sort of underexploiting the Internet markets, and there's tremendous growth there. So that's a big initiative of yours now, right?

RM: Yeah. Absolutely.

SA: And you think somebody else…

RM: And you can really launch an Internet site very well on television. Shocking videos(?) came out last Sunday. There were a lot of ads on the Super Bowl for different sites. Those sites on Monday, 24 hours later, were averaging an 85% increase in hits. So it's a great medium for selling people(?), or getting them involved on the Web, and with particular sites.

SA: Mm-hm. Okay. I want to switch gears for a second and talk a little bit about politics, because people are very interested in your politics, so I'll get back to business in a minute…

RM: (Laughs)

SA: …but I don't want to miss the chance to do this. A couple of issues, one is if you could just be explicit about what you see the role of the political position that you have on your newspapers and on Fox. What do you think is the appropriate role for you to project your political views within the media? Just talk about that, talk about balance versus political position, how much of your political viewpoint should be in the coverage of your (Inaudible)?

RM: (Overlap) Well, I think a newspaper should be absolutely a matter of freedom of speech in your editorials. It's not a question am I an old-fashioned proprietor doing this, an editor shouldn't be touched or anything else. You know, if you take that view, and you get a bad editor, well, then you've got to get a new editor. You know, you start getting hurt. So the buck stops at the top. On television, I believe you've got to be absolutely straight, and people laugh at this when we say, "Well, we're absolutely fair and balanced on Fox." It's just not true. I mean, you have commentators in the evening to…(Inaudible) is thought to be very conservative. In fact, he's more a populist I would say than the others. You see him attacking Republicans all the time, and always giving both sides a chance. Hannity is undoubtedly an intellectual conservative in putting his point of view, there's no doubt about that, and very popular. And then you have great (Inaudible) who is at heart a liberal, discussing social issues, and court cases, and so on. I would say it's pretty balanced, and no one can tell me that the (Inaudible) reporter at 6 at night, or those sort of hour shows before and after that of news aren't in any way biased. It's just that we tend to report both sides, which is quite a new thing.

SA: There's certainly a perception that the liberals who are brought on the show are kind of stereotypical…are selected to be as unappealing as possible. (Laughter) I've certainly read that point of view, and that while you're hearing both sides of the story, clearly the dominant intellectual view point coming through is quite conservative, quite hawkish on military issues. Do you not accept that?

RM: I think we have strong liberals, and we'd like more. But every now and again, you know, the Democrats put out the word that you mustn't go on Fox. Don't legitimize it.

SA: So you're putting out a call for good, strong attractive (Inaudible)…

RM: (Overlap) All the time.

SA: …to come on the show? (Laughter) Okay.

RM: Half the people in Fox News are out there trying to (Inaudible) people.

SA: Okay. What about The New York Post, just to stay on that subject for a minute? There's certainly a perception in New York, The New York Post comes at a lot of its news stories from a much more conservative perspective than at least any of the competing media. Do you accept that?

RM: Oh, yes. Oh, yeah.

SA: And you think that's…

(Overlapping Voices)

RM:The New York Times is outrageously biased. (Laughter) I mean, you read one any day, and you can see the agenda pretty clearly, which you won't see in The Post, because The Post puts out page one as (Inaudible) to sell papers. But as you get into it, and as you read the editorials, and the columnists, they're pretty conservative certainly. And we think that's pretty good. People can take their choice. They don't have to buy us.

SA: So if you had an editor of The Post who had a less conservative position, you'd be okay with that because of the freedom of expression, or you'd say, "Look, this is a Murdoch paper and I want the editorial position to be more conservative?"

RM: It's not a Murdoch paper. Yeah. I often disagree with (Inaudible) in The Post in the editorials, but that's okay. We're broadly in alignment in my thinking on it. And, you know, there are a lot of people who appreciate it. I mean, it's the only paper in New York who is not going down in circulation.

SA: One more political question. Clarify your views on Hillary Clinton. (Laughter) I don't quite understand where you are on Hillary Clinton.

RM: And nor do I. (Laughter) I would just say that she's a very considerable, very intelligent lady, very calculating. I think that unfortunately she's a bit divisive. People think, "Oh, God, another eight years of Clintons." She's way to the left on the (Inaudible) socially, which is okay. But I'm not really frightened of her in terms of foreign policy and social things, and defense. If anything, she might overcompensate for image there. She would certainly be a lot stronger, and subtler, and better than her husband was. (Laughter) I'm not talking about foreign policy. Defense.

SA: You hosted a fund-raiser for her, didn't you? I think I read that.

RM: Yeah, yeah, right.

SA: So are you actually supporting her?

RM: No.

SA: For President?

RM: No.

SA: So why did you host a fund-raiser?

RM: Because some people in the office wanted to do it, and I said, "Fine, let's have a breakfast and (Inaudible)." She didn't know…we couldn't imagine, but of course, such a fuss, and so much notice.

SA: Would you consider…

RM: (Inaudible) and horror. (Laughter) We raised, $40,000 to $50,000 for her, which is a lot less since she (Inaudible) for breakfast.

SA: Would you consider supporting her…

RM: But she was very impressive (Inaudible) I must say. Just the way she handled issues, and sidestepped them…(Laughter)

SA: You liked that? (Laughter) So would you support her…

RM: I (Overlap/Inaudible) left, or sort of had to be…been pulled so far to the left on the war. But, you know, you read what she says about the war. It leaves a lot of options open. She says, you know, "If I'm President, the war will come to an end." Yeah, but when? You know, she might fight it pretty hard for five years first. She's leaving…she's very careful in her use of words, and, you know, we all know that there have been mistakes in the war, but she's had the guts to stand up and say, look, she saw everything, and she pretty much, she did see it. She knew what President Bush knew, and she would have made the same decision in going in. I hope she would have run it better.

SA: Who else do you find appealing in the current Presidential race? Who do you like? And then we'll get back to business.

RM: Well, okay. I don't know enough about them. I'm looking forward to meeting Obama. Everyone tells me he's very, very impressive. The man I would like to see get into it…I don't know about winning it, but I'd love to see him, because he lifted the whole debate incredibly, would be Newt Gingrich. I think he's the most brilliant and interesting person out there at the moment. Doesn't say be the best President, I just think he would make all the primaries very, very interesting, and a lot more serious.

SA: News Corp. is now based in New York. What do you think of Mayor Bloomberg in terms of a potential Presidential candidate?

RM: Oh, really tempting to support. I can't tell you how this can be transmitted across the country except it will cost him a billion dollars, which apparently doesn't worry him. (Laughter) I'm serious. But he can run a clean government, efficient government, and I think he can be a (Inaudible) for policy and strong. He would be honestly and openly in debates to the left of Hillary Clinton, and, you know, how much would that hurt him? You know, in mid-America, probably a lot. I don't think he'd be counting on winning states there. He could conceivably do very, very well on both coasts. And he would be an extremely interesting candidate, and a very able chief executive. You wouldn't get an abler chief executive for the country, or someone that's troubled by having good people around him. I just think he's done a superb job in New York, and, you know, he's a very genuine public servant. He's made a lot of money, huge, more than anyone realizes, and he's all about giving it back now. He's a very admirable person.

SA: Okay, let's turn from Bloomberg to Borat, and (Laughter) talk a little bit about your film business. First of all, overall, I mean, to get back to sort of going through your businesses, what do you see is the prospects for the film business? There is so much going on, there are concerns about digital rights, there is concern about how the translation is going to be made to the small screen. Are you optimistic about the film business, and how do you see it going forward?

RM: Yeah, well. Extremely with one or two caveats. Very, very optimistic. You know, you go to every consumer electronic show, you see new platforms and so on. Now, some of these things are going to be popular on tape(?), a lot aren't. But there are going to be more ways to show films and entertainment, and it's going to be a bigger part in people's lives. We just want to be paid for it. And the issue of piracy I think on the Web and so on at the moment for movies is not a serious one. I mean, we would rather be without it. We're totally losing something. But we have to work a lot harder at that…It's not running to Washington, it's just getting the technology right. It's really going great. The DVD sales, we're having record DVD sales. If you take it across the world, I would say that our library DVD sales have slowed down a lot, they've flattened out. I wouldn't say that…they've stopped growing. They're flat. But for new films that have come out, they're better than ever, the market is better than ever.

SA: So despite Pay-Per-View, despite all the other alteratives, people still just want to go out and buy DVD and create a library out of it, as far as you can tell?

RM: Absolutely.

SA: Yeah, yeah.

RM: But there are all the time new challenges on piracy. I was just hearing yesterday just something sort of beginning to come up in Europe, particularly in England, where there are very nicely produced DVDs, nice covers, everything for sale in hotels, or people with a suitcase full of them, and they're all coming out of Russia. They're like a fifth or less than the regular price. So we have to try and stamp on those things.

SA: Are people going to want to watch movies on cell phones, small screens? Is there a big future in that? Some people believe (Overlap/Inaudible).

RM: (Overlap) I don't believe so. It's possible, but I don't really believe so. I don't think they even really want to watch it on their PC, unless the picture gets a lot better than it is at the moment.

SA: Have you seen the iPhone…

RM: But, you know, we'll get it…Steve, obviously (Inaudible) there are various (Inaudible) but you hook your PC into your TV set, so then it will be fine. The big emphasis at the moment is on bigger, bigger screens with higher-quality pictures, and higher definition, with their prices crashing. There's so much competition.

SA: Do the large screens at home challenge the theater market? As you can see a beautiful, big screen, are people going to be less likely to want to see the early release in the theater?

RM: They might think that, but no. They want the early release, they want to go out occasionally, out of their homes. You know, a year ago people said, "Oh, it's nearly over. The cinema is down 5%." Well, this year they're up more than that. It really depends on are there any good movies out there. And there were some very popular movies this year. I wouldn't say great classics, but there were some very interesting, (Laughter) very popular movies.

SA: Did you actually go see Borat? (Laughter) Have you seen it?

RM: Sure. Yeah.

SA: Okay.

RM: Seen it about three times. (Laughter)

SA: Then I guess I know what you think of it, but I'm going to ask you anyway. What did you think of it, and in terms of its…

RM: I took some people here to a little private theater, about eight of us, and we watched it, and we laughed like hell at it. We went out to dinner, and we laughed all over again. (Laughter) You woke up in the morning and I said, "God, that was great. Should be really (Inaudible)." (Laughter) I don't think it destroyed our culture or anything. (Laughter) And if anything, it's made Americans laugh at themselves. It was a pretty clever picture.

SA: And it's done very well.

RM: Fabulous. I mean, considering the price. I think worldwide it will do probably a quarter of a billion in gross. Now, we get a bit less than half of that, and it's the cost of the making the piece, there's the cost of marketing it, but then there's the DVDs to come and, yes, sir. Well, it will be good pay-television revenues, HBO, people will be very keen to buy it.

SA: So is everybody going to want a copy of that now? Are there going to be six different sort of junior Borat movies out there? Is the way Hollywood works, that somebody sees something and everybody wants to do it?

RM: Yeah, but it takes talent. There will be a sequel. He's signed up to do a sequel for us. He's first doing something else, well, he is, or his agents, or somebody, huge amount of money. We just passed them…they wouldn't even show us the script. (Inaudible) into a huge sum of money. So we passed, and I think Universal picked it up. Then he'll probably come back and do a Borat II. (Laughter) You know, these things are risky. They don't necessarily repeat themselves easily.

SA: Another controversy or something that you've been involved in lately, that's been in the news a lot was the O.J. Simpson book, and I wanted to ask you about that, as well. I guess I'm going to ask you about your role in something like that. I mean, how far does it get before you even know about it, and how do you decide when and how to come into a situation like that?

RM: I didn't know enough about. I was asked about it. (Inaudible) though I didn't speak to him, only once a year, or (Inaudible) suddenly called me and said, "Did you get this book? What about it?" I said, "It really reads like a confession, and he gets no money. I don't care which(?) of those kids (Inaudible) economic. That's all right for me." That was many months ago. And I honestly…it's my fault, I should have been closer to it…lost touch with it totally. And then I was having a weekend, of all places, on my ranch in Australia, and the phone went, and a number of people here, (Inaudible) relations, and Peter Chernin, and Roger said, "You know, there's an uproar, and really we should take a powder on this." And I said, "I'm too far away to change it. That's fine if that's your judgement."

SA: Were you surprised by the uproar based on what you had known about the book in the first place? Did it take some time to (Inaudible)?

RM: (Overlap) No, I think there was an awful lot of (Inaudible), but there was also some pretty genuine feelings, and clever working up of public opinion by the families of the victims, which is very understandable. And perhaps they should have thought about that. And, you know, it was a mistake. Sure. And that was not the reason we parted company, (Inaudible) because I thought, "Well, I had given them the green light at the earliest." But there (Inaudible) another book coming, which was a pseudo-pornographic thing about another great sports star, or icon. And I thought, "Oh, we don't want to go through this again. Just cancel that book." (Laughter)

SA: This was the fictionalized book about Mickey Mantle, right?

RM: Yeah. And that led to a hell of a row. And that was it. And then she went(?). You know, I don't know your (Inaudible). Judith was very good at Simon & Schuster, where we noted that she had a great sort of popular feel for what could sell, and did some very good best-sellers for us to start with. But then it was sort of downhill. (Inaudible) wanted a television career for Roger, and that lead to a few incidents, which I needn't go into here, but led me to believe that she just was not a team player. That's putting it mildly. (Laughter) Anyway…and I wouldn't want to get an opportunity to (Inaudible) or badmouth her. She did have ability. She wasn't for us.

SA: Were you angry about how the O.J. thing developed, or did you say, "How did you let it get this far, and you're embarrassing me," and…

RM: Those were the two aspects of it, I thought, yes.

SA: Mm-hm. Yeah. In the very few minutes we have left, I do want to talk a bit about the global market because you are, in fact, a global businessperson, and we tend to in New York talk about New York because, you know, everything West of the Hudson is not so real out there, but (Laughter)…what do you see as the biggest opportunities globally? Where do you see growth? You've made some moves recently in Turkey by being a TV station, you're in Bulgaria. Where do you see great growth opportunities, both in Europe, and Asia, and elsewhere?

RM: Well, I think in Eastern Europe it's tremendous.

SA: Eastern Europe. Uh-huh.

RM: There's a bit of growth in Western Europe, but it won't be exciting, and it's very highly regulated. I think, you know, there is going to be competition and so on. We spent $10 million building a television in Sofia, Bulgaria, five years ago. It's now making $15 million a year. If we do that in a few (Inaudible) it would be very happy. We missed opportunities, actually, to do more of that. But we now the licenses, or a license in Serbia, which will be on the air very soon if it's not already. We bought what will be a full network right across Poland. We think is a great potential there. The advertising markets, already over a billion dollars a year, it's growing at a steady 20% a year minimum. If we're able to (Inaudible) write your programming, and get a decent share of the audience, and there aren't(?) competitors there, we think we can do extremely well, and the same in Turkey. Some of these new markets, Indonesia, we're going into.

SA: In TV or…?

RM: TV.

SA: TV. Uh-huh.

RM: Traditional TV. These markets, you've got to understand, are 20, 30 years behind here. India is 40, 50 years behind in some ways. India we've done very well programming, (Inaudible) channels, and sports. But, you know, keeping the number one entertainment channel with advertising growing there all the time. I think if there was any country today in the developing world that I would double down in, it could be in India if I could find the right opportunities. You know, it is a working democracy. There is a rule of law there. It can be rough, but you can get through it, and you can win. And India is the most exciting, for me. China, of course, is immense, and remains, but is not opening up yet. Huge barrier to entry. Even if they aren't stated in advance, they seem to appear later. So we keep a presence there, we have a little channel that we go out of Shanghai, which basically breaks even. And we're just going to have ourselves, or be there until we see a change in policies, which will have to come. There is a huge emerging middle class in China, and it's going to want to be heard.

SA: Have you been disappointed in the last year or two at the rate of change? Do you feel as if it's not opening up as much as you'd hoped, in terms of the government policy, or is it pretty much as you have been expecting?

RM: It really follows my experience. Disappointed that the experience kept going that way, but yes, you get some promises, and then are you a minister of something? With any (Inaudible) about, and there's a crackdown, and everything stops. You know, that's a sovereign country, that's their way of doing things. We'll just wait.

SA: In terms of India…

RM: (Inaudible) find the Americans Google trying to get through. EBay is (Inaudible) intent. Yahoo is a very doubtful investment in (Inaudible). It's very, very difficult for foreigners to get any traction there at all.

SA: Very often people sort of contrast the rules of law issues in China with the corruption and inefficiency issues in India. I mean, are you finding some improvements in terms of the corruption and inefficiency in doing business in India?

RM: We've never been asked for any bribes in India. I mean, we've been very careful. We just started a DTH operation there, in association with the (Inaudible) there, the cleanest, sort of gold standard part as possible. And with them no one would dare ask us for a bribe, and that's our sort of protection there.

SA: Okay. Last question, and thank you, by the way, so much. This has been so fascinating. Succession. Everybody always asks you that, but it's of high interest. Anybody who cares about your company has got to care about what happens next; you're 75, obviously deeply involved and vigorous. What are your thoughts…I understand it's a board issue…but what are your thoughts at this point about succession?

RM: I just want to live forever. (Laughter) Enjoying myself too much. It's a matter for the board, and particularly the independent directors, but, of course, I've got to take into account, you know, what do the shareholders think, and my family, or my kids together will have about 40% of it. So I imagine they'll have a voice on it if they can agree between themselves, which I'm sure they (Inaudible).

SA: (Overlap) I mean, there's certainly speculation that your son James is now the front runner. Would he be a good head of the company?

RM: Well, I think any of them would be great heads. But, you know, it's too early to say. He's doing a great job of Sky(?). Sky is making, you know, huge…he's got the best (Inaudible) casting team in Britain, he's a mast(?) there. He went there and they said, "Oh, this must be nepotism." It wasn't, as a matter of fact, we went through every possible test, 800 or so. But no one believed that. Now they're saying, the same people who are screaming at meetings are saying, you know, "You can't take him back to America. Whatever you do, we need him here. He's running Sky." So, so far he's doing very well. But there are other good members of the family.

SA: I'm afraid we have to end. Thank you so much. It's been a pleasure having you.

RM: Thank you.

(Applause)

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