View from City Road: Murdoch paints gloomy picture

WHATEVER else one says about Rupert Murdoch, he certainly has chutzpah. How many other world businessmen would make a speech saying technology will reduce the market position of their business while in the early stages of launching a share issue that many see as essential for the future development of that same business?

Speaking at an Asia-Pacific business conference in Sydney yesterday, Mr Murdoch contended that the pace of technological change would mean that in a few years there would, in effect, be no way of either dominating or regulating the media industry. He argued that new developments in communications technology, such as satellite broadcasting and digital compression, would allow access to any information anywhere in the world.

According to Mr Murdoch: 'There is no way that any company can control the media today. It is a huge open world for everybody.'

His remarks were primarily aimed at the regulators of the media, who feel they can dictate what newspapers and TV stations within their jurisdiction can carry.

Mr Murdoch argues that media markets will become like the foreign exchange markets, where technology means that access to the commodities in question (money in foreign exchange, information in the media) cannot be regulated. Attempts to control the media could lead to their own version of Black Wednesday.

If one accepts this view, it paints a gloomy picture for media companies, not least News Corporation, Mr Murdoch's debt-ridden media empire.

Data are a resource and those wishing to use information are charged for access. Direct access to information means that it is less easy to control and therefore less easy to value.

Mr Murdoch's attempts to widen access only lessen the value of what he has. In the UK we see this as UK Gold, the Thames TV/BBC rerun channel, challenges Mr Murdoch's BSkyB for the satellite TV audience. Mr Murdoch's speech is a good case for avoiding News Corporation's shares.

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