Murdoch, other chiefs discuss economic woes
Times are so tough, even Rupert Murdoch has sworn off deal-making.
The News Corp. chief joined execs from Time Warner, CBS, Liberty, IAC, Marvel and Comcast on Wednesday at the Grand Hyatt in Midtown for the start of a two-day confab sponsored by Goldman Sachs, one Wall Street institution that has thus far survived.
The topic: this week’s still-disorienting series of financial events.
Toppers and investors alike took a subdued tone in assessing the wreckage of Lehman Bros.’ dissolution and the sale of some assets to Barclays, Merrill Lynch’s sale to Bank of America and the government’s massive bridge loan to insurer AIG. As they spoke, the Dow was falling an additional 449 points, or more than 4%, with most media shares also down sharply.
Some key points:
- Murdoch said he won’t be doing any deals in the near term despite having cash on hand.
“We’re not doing anything while the economic future is as murky as it is now,” the News Corp. chief said.
In particular, he added, “We’re not interested in buying any more newspapers. We have what we have. And they’re undervalued, which means we probably can’t sell them.”
- DreamWorks Animation’s Jeffrey Katzenberg believes content with strong brand identity stands to gain even in the worst of times.
“We have seen that, at worst, our product is recession resistant, and (at best) historically has been up. The single greatest price/value entertainment (option) is at your local movie theater,” the DreamWorks principal said, especially “if your brand is consistent, high quality.”
- CBS’ Leslie Moonves noted that Bank of America has been a major advertiser for CBS. “Merrill Lynch was not” a big spender, he added. Despite everything, “we still love the network TV business,” he said, citing a strong upfront ad market, increasing CPMs and more refined ratings measures.
- Time Warner’s Jeff Bewkes continued to make the case that the economy was harming media congloms’ valuations but not their ability to keep growing. He estimated that 25% of Time Warner is ad-supported, a lower level than its rivals, and while its share price is no great shakes it hasn’t been punished in recent days as badly as those of Viacom or News Corp.
“For decades these businesses have not been sensitive” to economic downturns, Bewkes argued.
There was consensus that the current meltdown is hitting local TV stations and newspapers hardest. Murdoch said in News Corp.’s case, strong cable networks, Web assets and international reach can balance things out.
He said he’s mainly looking to add small pieces to his global empire, and will focus on assets with subscription models, versus advertising. “Hard times are good for big companies, if you think of the long term at all,” he said.
Murdoch also stepped in to defend the Wall Street Journal, which he said is holding up better than other papers since it’s got more business-to-business, than consumer advertising. He noted the company gets $100,000 for an ad on the WSJ’s home page — and $500,000 for one on the MySpace home page.
He expects the Journal’s print advertising to be flat to slightly lower, but noted increases at the European and Asian editions. He predicted that all Dow Jones properties together will boost subscription revenue by up to $300 million a year for the next two to three years.
In response to a question, he mused that he may have been hasty in selling satcaster DirecTV. The threat he feared from cable’s triple play, and from telecom companies, hasn’t really materialized yet, he said, getting a dig in at satellites’ two rivals. “But I still think I was right long term,” he said.
As for the movies, Murdoch acknowledged the film studio had, as expected, a rotten summer. He said the studio “will be OK” for the rest of this year but that most of its big upcoming releases, like “Night at the Museum 2: Battle of the Smithsonian,” “X-Men Origins: Wolverine” and “Ice Age: Dawn of the Dinosaurs,” won’t really show up in profits until 2010.
Katzenberg took a far mellower approach to the confab than last year, when he exchanged barbs with Viacom chief Philippe Dauman over DreamWorks’ tenure on the Paramount lot.
He was candid about saying DreamWorks Animation has been working hard at being more consistent. “In the past we’ve had big hits, but also misses,” he said. “If you look at our film business going forward I think we’re hitting our stride.”
The studio boasts three franchises, “Shrek,” “Madagascar” and now “Kung Fu Panda.” The pieces may fall into place over the next several weeks for a “Panda” sequel. The original hits homevid Nov. 9.
Katzenberg was cautiously upbeat on the company’s newest venture, a musical stage version of “Shrek” that opens on Broadway this fall after a run in Seattle to mixed reviews. The venture takes DWA deep into rival Disney’s territory.
“We’re drilling where others have, and when they’ve hit, they found gushers,” he said. “We are cautious and don’t want to get ahead of ourselves, because Broadway does not behave like the movie business.” But, if a show succeeds it has “the value of an original movie, if not several original movies.”
He said the “Shrek the Musical” is being fine-tuned in response to critics, who were often “spot on.”
“I think we’ve got a tiger by the tail. I think we’ve got it, but there’s a lot of work to do.”