James Murdoch, annointed heir to his father's media conglomerate, News Corporation, signalled that the family love affair with newspapers is coming to an end and the business will shift its focus to television and entertainment in the future.
Rupert Murdoch, son of an Australian newspaper owner, built News Corp into one of the most formidible newspaper businesses in the world, owner of The Times and The Sun in the UK and, since 2007, The Wall Street Journal in the US. But at an investor conference in Barcelona yesterday, his son – who is now chairman of News Corp's businesses in Asia and Europe – said that the company's newspapers and journalism would decline in importance.
"In the business of ideas, which is the business that we are in, we do think journalism plays a role, and we do think there are business models there that will make a lot of sense, albeit perhaps not at the scale of some of our broadcasting businesses and other entertainment businesses," James Murdoch said. "Is it going to be as big a role? No."
And he added: "Structurally, television is vastly more profitable and a big opportunity."
Investors have been putting pressure on News Corp to reduce its reliance on newspapers, which are seen as having low growth potential because of the proliferation of news content on the internet. Rupert Murdoch, who is chairman of News Corp, has become, if anything, more vociferous in defence of newspaper journalism in recent months, threatening to ban Google from offering links to his papers' online content and promising soon to start charging for newspaper content that his titles put on the internet.
James Murdoch's comments reflect a view that, no matter how successful that effort to convert readers to a paid-for service, newspapers will continue to offer less profitable opportunities for News Corp.
The younger Mr Murdoch's empire-within-an-empire includes the UK newspaper business, News International, where he is spearheading efforts to introduce daily fees for newspaper websites. But he is also a former head of Star TV in Asia, the current chairman of British Sky Broadcasting and overseeing significant pay-TV businesses in Italy and Germany. One of his priorities, he told his audience at the annual Morgan Stanley technology, media and telecoms conference yesterday, is to build the best pay-TV business in Western Europe. He said he also plans to expand News Corp's operations in India. He also promised to rebuild the profitability of the newspapers in the News Corp stable, which have been hit by competition for advertisers from the internet, falling circulations and the effects of the recession.
Mr Murdoch said News Corp aimed eventually to develop a wholesale market for its digital news. "Our digital activities, we are going to push them harder but we are actually going to be charging a premium price for them. We will have a smaller audience than giving it away for free, but I think it is the crucial step in starting to develop a wholesale market for digital journalism."