Murdoch, the Next Generation

By: Joe Strupp

Updated at 1:30 p.m. EST, Dec. 17

At first glance, Lachlan Murdoch seems the antithesis of the big-city newspaper publisher. With boyish good looks, short-cropped hair, and an engaging grin, he resembles a rookie ad-sales representative or cub reporter more than the most powerful man at one of America’s oldest and most famous newspapers. His office, located two floors below the busy New York Post newsroom in midtown Manhattan, is large, but lacks the grand, corner-window view that someone of his stature, and lineage, could demand. Instead, a wall of windows looks out on the roof of the floor below, offering just a glimpse of the city’s daily rush.

A pair of tattoos, including a lizard, decorate his upper arms — a souvenir, he says, of his rock-climbing days. They are hidden at the moment, however, under a dark, pin-striped suit and navy-blue shirt, as the heir apparent to the News Corp. empire explains why his newspaper philosophy, mainly honed in Australia, will work in the Big Apple. “”We run great newspapers everywhere, so there is no reason we should not do that here,”” he boasts.

Even before he became publisher of the Post in May, the 31-year-old Murdoch was spearheading several changes as deputy chief operating officer for News Corp., the parent company headed by his father, K. Rupert Murdoch. First, he cut the Post‘s single-copy price to 25 cents from 50 cents in 2000; then, he oversaw the construction of a $250-million production plant in the Bronx that opened last year and made quality color printing possible.

“”Look at this color, look at this blue!”” he says excitedly, comparing the quality of an ad for the movie Treasure Planet in the Post with similar images in The New York Times and Melville, N.Y.-based Newsday. Then, grabbing the rival New York Daily News, he merely shakes his head at the telling fact that its version is in black and white.

In the newsroom, Murdoch also stirred the pot last year, replacing popular editor Xana Antunes with veteran Australian newsman Col Allan. Within two months, Allan fired five top editors and liberal columnist Jack Newfield, replacing all but one with other Post staffers. The abrupt change put many newsroom veterans on edge.

The result of the various Murdoch machinations: a weekday-circulation increase of more than 150,000, to 590,061, in the six-month period ended Sept. 30 of this year from 436,796 in September 2000. While the Daily News remains ahead with weekday circulation of 715,070, its increase over the same period was only a little more than 13,000.

“”It comes from Lachlan’s vision,”” Post General Manager Geoff Booth says of the paper’s recent success. A 15-year News Corp. veteran who ran The Gold Coast Bulletin in Australia before coming to New York a year ago, Booth believes Murdoch knows as much about newspapering as men twice his age. “”He has a feel for the newspaper — from the layout to what a good news story is.””

Ask Murdoch why he loves newspapers, and the answer may surprise you. While he thanks his father for much of his business drive, it’s his grandfather — Sir Keith Murdoch — whom he credits for infecting him with the news bug. “”He was a great journalist,”” Lachlan Murdoch says of his progenitor, who died in 1952 after a career that included editing several Australian papers and overseeing World War I coverage in London. “”He also helped fund the Victorian Library in Melbourne and … the National Gallery [in Victoria]. He was a real leader in the community.””

Making the Post the tabloid leader in a far different community is the young Murdoch’s chief desire. Fresh off its latest circulation surge and a 33% boost in advertising revenue for the first nine months of this year, the Post is poised not only to make money for the first time in decades but also to beat the Daily News in circulation, Murdoch believes. “”It’s something that is a long-term goal of ours, overtaking the Daily News,”” Murdoch says in a quiet, surprisingly modest manner during an interview in his eighth-floor Rockefeller Center office. “”It will be a nice milestone, but it is only one milestone of many.”” The main milestone, Murdoch hopes, will be reached in July 2004. That’s when he expects the Post, which has lost an estimated $10 million to $20 million annually in recent years, to turn a profit.

But does Murdoch have the business sense to bring the Post around to profitability? During his 10 years at News Corp. in Australia, the company’s papers there did well, but he also gained notice for pushing its investment in two outside ventures that cost the company nearly $1 billion. “”It has been a mixed performance,”” says Stephen Mayne, an Australian columnist and former News Corp. editor. “”On the non-newspaper side, he has really struggled.””

All in the family

Lachlan Murdoch’s rise through the ranks of his father’s media empire is no surprise. Born in London, the third of Rupert Murdoch’s five children recalls being submerged in newspapers from an early age as a child raised in Manhattan’s wealthy neighborhoods after his father bought the Post in 1976 (later selling it in 1988 and taking control again in 1993).

“”I grew up every morning at the breakfast table with my dad flipping through the New York newspapers,”” he remembers. “”Back then, papers were everything.””

Among Murdoch’s most prized possessions, which he is quick to point out to visitors, is a photo hanging outside his office that shows him, at age 6, outfitted as a Post street hawker.

Throughout his schooling, he learned the newspaper trade with summer jobs that included clearing presses at papers in Sydney and working as a sub-editor at The Sun and The Times in London. “”I’d be elbow-deep in ink and grease, and I got a real love for the smell of the presses,”” Murdoch says. “”I still miss that shaking when the presses roll out.””

Following graduation from the exclusive Aspen Country Day School in Colorado, Murdoch attended Princeton University, earning a bachelor’s degree in philosophy in 1994 before returning to his family’s homeland to join the News Corp. empire. His first assignment, at age 22, was general manager of Queensland Newspapers, which publishes The Courier-Mail in Brisbane. A year later, he became publisher of The Australian, a national newspaper based in Sydney. By late 1995, he also was deputy CEO of News Ltd., which includes all News Corp. Australian operations.

By 1997, Murdoch became chairman and CEO of News Ltd., adding responsibility for all of News Corp.’s U.S.-based print operations in 1999 (a position he retains). His brother, James, operates News Corp.’s Star TV in Hong Kong. Today, in addition to the Post, Lachlan oversees all 114 Australian papers, all 35 local Fox TV stations owned by News Corp. (but neither the Fox TV network nor Fox News Channel), News America Marketing, HarperCollins Publishers, and a satellite TV system in Australia.

“”Lachlan has demonstrated great leadership and innovation,”” Rupert Murdoch tells E&P. “”Beyond being my son, he is an invaluable partner to me in our business.””

The junior Murdoch says he’s in contact with his father regularly about the Post, but does not take marching orders from him on a daily basis. “”He says to get a haircut now and then, and sometimes asks if I’ve had a shave,”” he quips. “”He is my boss — that is the relationship.””

Ups and downs Down Under

Although Murdoch has quickly scaled the News Corp. ladder, his advancement has not come without stumbles and some criticism from Australian pundits and business leaders, several of whom call him nothing more than a product of nepotism. “”He is best known for having failed spectacularly in a telecom venture,”” says Colin James, a business consultant in Australia and New Zealand. “”For that reason, I would rate him as yet another rich brat.””

The failed venture is One.Tel Ltd., a telecommunications company that Lachlan Murdoch invested heavily in with James Packer, son of another Australian media mogul, Kerry Packer, in 1999. In the end, the project reportedly lost News Corp. more than $500 million. “”It was really the first time he stepped out from his father’s shadow on an investment, and it was deeply flawed,”” says Annie Lawson, a media reporter at The Age newspaper in Melbourne. “”He was completely hood-winked,”” adds Neil Chenoweth, a journalist at the Australian Financial Review.

But the One.Tel debacle, which came under review this year by the Australian Securities and Investment Commission, was not Lachlan Murdoch’s first troubled investment. Years earlier, when he was in his early 20s, the company sank just under a half-billion dollars into a startup rugby league that proved contentious, lost money, and blemished his r?sum?. “”These [projects] were known for big promises, lots of capital, and not bothering too much to make sure the business is sufficiently run,”” observes Mark Colvin, an anchorman at the Australian Broadcasting Corp.’s PM news show. “”It revealed a lot about his na?vet?.””

While Murdoch declines to comment on the two business failures, News Ltd. Chief Operating Officer Peter Macourt defends his boss, claiming the One.Tel deal went bad because of misinformation from the company’s executives. “”He was profoundly misled,”” Macourt says.

Running News Corp.’s Australian newspapers has turned out far better for a maturing Murdoch. Although he has taken some hits for trying to “”Americanize”” several of the Australian papers (in terms of style and spelling), he seems to be maintaining their success. “”They are more market-oriented than they are editorial quality,”” says Lawson. “”He is not changing anything radically.””

Others say Murdoch has had trouble living up to expectations that he quickly display the business acumen of Rupert Murdoch. “”He doesn’t quite have his clout,”” says Chenoweth. “”But he’s trying hard.””

News Ltd. CEO John Hartigan, who has worked for the Murdochs since Lachlan was a baby, praises his decisiveness. In 1999, he recalls, The Australian was ready to launch a $1-million promotional campaign that had been in the works for months. After reviewing the campaign, Lachlan killed it a week before it was set to go. “”The execution was wrong,”” Hartigan says. “”He felt it was not what the newspaper should be, and he was right.””

Murdoch incorporated

A dual citizen of the United States and Australia, Murdoch, who is married to model Sarah O’Hare — perhaps best known for her appearance in Wonderbra ads and Sports Illustrated‘s swimsuit issue — spends about two weeks in Australia every two months or so, with the majority of time in the States. He considers himself Australian, counting among his friends actor Russell Crowe and Moulin Rouge director Baz Luhrmann. When Crowe was in a widely publicized bar fight a few weeks ago, Murdoch was reportedly by his side, although not involved. Still, the publisher says he thrives on New York’s “”pace and its energy”” and is known to prefer the subway or a motorcycle ride between the Post offices and his downtown home instead of a limousine or taxi.

When asked about his personal life, Murdoch quickly changes the subject back to business. Mention his father, and he’ll focus instead on a Post layout or a color spread in a Sydney paper as he works his way through a pile of News Corp.’s Australian publications, pointing out examples of improvements he’s made to each. He seems open and approachable, yet cautious, and requires that a representative from the Post‘s public-relations firm, Rubenstein Associates Inc., sit in on interviews.

During the conversation, the publisher’s comments range from relaxed patter on a white couch, with a glass of mineral water in hand, expressing confidence that his paper will make money soon, to excited chatter over the need for U.S. newspapers to make the most of their potential. “”One of the problems with American newspapers is that the design, the look, and the feel lack any sort of vigor,”” he notes. “”That’s a pity.””

Following the second interview, conducted the day before Thanksgiving, Murdoch hopped a plane to Australia for a wedding, then two weeks of visits to the Australian properties before returning to New York in time for an editorial-board meeting with Mayor Michael R. Bloomberg.

The Australian tour included a weekend gathering of top executives at the Murdoch family sheep ranch for an intense round of meetings and planning. “”It was pretty much all business,”” recalls Hartigan.

Lachlan Murdoch is well-known for his politeness to the press and employees, remembering the names of many in his legion of workers and stopping in to chat during visits to the different publications. “”He’s a cheery lad,”” says one News Corp. executive. His well-mannered reputation made news during the difficult One.Tel hearings, when he offered a “”Bless you”” after an observer in the room sneezed.

Murdoch says the Post gets more of his attention than any of his other business entities these days, taking about 35% of his time. “”I spend a disproportionate amount of time on it from a revenue point of view,”” says Murdoch. “”But it is very important for our position in New York City.””

That position includes the Post‘s sensational covers and amusing headlines, and news priorities that seem to place “”Wacko Jacko”” (Michael Jackson) on Page One a tad more frequently than events might warrant. “”I think we’ve got the right balance,”” Murdoch says.

Murdoch also endorses the Post‘s conservative editorial page, his family’s only U.S. newspaper voice. While he says he doesn’t direct the editorial page from above, he admits it knowingly reflects his family’s views: “”My father and I feel responsible for everything in the paper. Newspapers have a responsibility to take opinions on things, as long as they cover news in a straight way.””

Covering the news, straight or not, has been in the hands of the hard-driving Col Allan for more than a year and a half. From the moment that change at the top was announced, Allan’s image was an issue, as local media pundits and some staffers imported tales of his Australia exploits, such as urinating in a sink during news meetings and earning the nickname “”Col Pot”” for his alleged dictatorial behavior. The new editor in chief’s subsequent housecleaning of editors did not surprise some in the industry, who believe Murdoch wanted a fresh view from the top. Still, staffers say the new regime has left many reporters and junior editors uneasy.

Allan, 50, discounts criticisms and says the paper’s rising circulation and revenue are a testament to an approach that has seen stories beginning on Page One, shorter items, and more national and international news. Allan stresses that the paper is not finished improving, saying the Post puts out only about three good issues each week. “”That’s not good enough,”” he says, while scanning a wall of TV sets next to his desk. “”We’ve got to make it four, then five.””

He also took a swipe at the Daily News, saying that Mortimer B. Zuckerman, its chairman and co-publisher, doesn’t know newspapers. “”The Daily News is owned and published by a real-estate developer who is a good real-estate developer,”” Allan says.

Daily News Editor in Chief Edward Kosner, who once worked for the Murdochs as editor of New York magazine, shot back by deriding the Post‘s attempt to expand its national coverage. “”The Post is trying to be a national tabloid,”” Kosner says. “”The Daily News is most focused on covering New York.”” Zuckerman and Daily News President and Chief Operating Officer Les Goodstein were unavailable for comment.

Asked about Lachlan Murdoch, Col Allan says, “”He understands that it is all about ideas, creative people, and creating an environment where they can flourish.””

Lacho not wacko

Indeed, Murdoch is moving on a number of ideas. Future initiatives include expanding the Post‘s presence in Los Angeles, from about 2,000 day-old papers in news racks each morning to 30,000 same-day copies. He’s also planning a $20-million upgrade to the Bronx plant in January that will allow preprinted sections and inserts. Another effort to bring in more advertising calls for simplifying the paper’s ad-rate schedule.

“”We had more than 100 rate cards for different plans, and we brought it back to a manageable level,”” says Murdoch, who also directed ad managers to focus more on advertisers that help the paper’s image and agree to high rates. “”It doesn’t matter if you miss out on an ad your competitor has if it is not worth it for you.””

That approach resulted in the loss this year of advertising from Macy’s department store, one of New York’s biggest retailers. Post General Manager Booth says the department store did not want to pay the higher ad fees. “”The rates they were willing to pay would not cover our costs,”” he tells E&P. “”It’s time for us to get a better rate, and we will.””

Murdoch stresses the need for any paper to make its circulation improvements work for the advertising side, even if it means losing some potential advertisers. For example, he cites his push several years ago to make sure ads that ran in a new health-and-beauty section of The Sunday Telegraph in Sydney were tasteful. “”We were getting offers for penile injections and hair-removal ads,”” he remembers. “”We wanted to make the environment right, and eventually got the high-end ads for vitamins and skin care.””

Despite the loss of Macy’s, the Post‘s ad revenue soared 33% during the first three quarters of this year, according to Nielsen Monitor-Plus. This gain was sharply higher than at the Daily News, which saw its ad revenue rise only 12% in the same period. “”The key to achieving profitability is higher circulation and the new printing plant,”” newspaper analyst John Morton says of the Post. “”Even if the circulation is discounted, it can help.””

Knowing that future Post circulation increases cannot rely solely on the past price cuts or color improvements, Murdoch says a major media campaign will take place in the next 12 months. He also reveals that a return to a 50-cent cover price is likely down the road. “”The investment we are making will require that,”” he explains.

Don’t look for News Corp. to be adding any more U.S. newspapers to its arsenal of properties, even with the expected lifting of cross-ownership restrictions next year. Although the company has increased its multimedia influence in New York with the recent acquisition of WWOR-TV, to go along with its longtime ownership of WNYW-TV, Murdoch says he is not seeking to go the convergence route in America just yet, even though his company owns 35 U.S. TV stations, a number of which would be ripe for pairings with newspapers.

“”I don’t think there’s a lot of synergy between newspapers and television,”” Murdoch says. “”We keep an open mind to buy other newspapers, but I wouldn’t pick markets because you have TV stations in them.”” He admits that some bigger U.S. newspaper companies (such as Gannett Co. Inc. and the Tribune Co.) are in a better position for large-scale convergence. Still, he strongly supports the end of cross-ownership limits, which his father has fought in Australia, as well. “”The cross-media rules have killed a lot of newspapers,”” Murdoch contends.

To the manner born

Lachlan Murdoch believes he has learned a lot over his decade in newspaper management. Although he doesn’t snap at those who mention his youth and his family path to power, he believes they aren’t worth dwelling upon. “”You can only live the life you know, and that is what I have done. I’ve run newspapers for 10 years,”” he points out. “”It is pretty clear to me what needs to get done.””

Taking on New York’s tabloid war doesn’t seem to frighten the man whose recreational pursuits include rock climbing, yacht racing, and skin diving. “”That’s how he spends his time,”” notes Hartigan. “”Anything that’s got a degree of fear in it.””

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