This is a rush transcript from "Your World with Neil Cavuto," February 4, 2008. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: Did any of you, in the meantime — something not to cry over, unless you are a Patriots fan — catch that incredible Super Bowl game last night? You were not alone, 97.5 million viewers joining you in what was the most talked about and now officially the most watched Super Bowl ever.
I’m sure all of this is very good news for my next guest, whose FOX Broadcasting carried the game.
Joining me now from Los Angeles, Rupert Murdoch, the chief executive officer and chairman of FOX parent, not to mention this channel’s parent, News Corporation.
Mr. Murdoch, welcome. Congratulations.
RUPERT MURDOCH, CHAIRMAN AND CEO, NEWS CORP: Thank you, Neil. And congratulations on your predictions of the game.
CAVUTO: Yes, but that was — that was just a fluke, I have got to tell you.
MURDOCH: Well, what are you predicting for the market?
CAVUTO: Well, I hope better than what we have got.
(LAUGHTER)
CAVUTO: I do want to get into that, because we are down 100 points today, and you are just out with earnings that surprised the Street. They’re up across the board, operating income at one point $4 billion, a nearly 24 percent increase, revenue growth 10 percent.
Your company, at least at this point, and judging from the strong response to the Super Bowl, in terms of advertising, is not seeing the recession everyone in the media is talking about. Or have you just been lucky?
MURDOCH: No, I don’t think we have been lucky. I hope we have been good.
But we are also — yesterday, for instance, we had the greatest day ever in the history of our network, probably any network. We took over $250 million in revenue. And it was a great game. And you said 97 million people viewed it. I believe it was very much more than that.
CAVUTO: Yes, those are the conservative numbers. The number to beat, of course, is that final episode of "MASH," 106 million. What, I think that goes back to the early ‘80s, but I think you’re going to be able to beat that.
But, obviously, it was a special game, special circumstances, an unusual drama. Could that be repeated, do you think?
MURDOCH: Well, we hope so. Well, we only — we only do the Super Bowl every three years.
CAVUTO: Right. Right. You better hope that this kind of drama is every three years.
(CROSSTALK)
(LAUGHTER)
MURDOCH: That’s right.
CAVUTO: Let me talk to you a little bit about what is in the earnings today. And, of course, you are still benefiting in the business, the broadcast business, strong advertising.
I guess, every time you get a report like this, Mr. Murdoch, people ask, particularly on the advertising front, whether you are seeing any signs yet of a slowdown, because I guess you would feel and see it before others.
MURDOCH: No, we’re not. But we are pretty much booked out on our network certainly for the rest of this fiscal year.
We are very happy. Revenues are holding well around the world. You know, there’s little towns — cities where we have local stations which are feeling the housing downturn, but other places, like New York, are stronger than ever.
CAVUTO: OK.
Besides the good numbers that you registered here, Mr. Murdoch, everybody was abuzz when The New York Post, your — your signature paper in the United States, besides The Wall Street Journal, had endorsed Barack Obama. What was behind that? Some are insinuating that maybe ill will with Hillary Clinton. What?
MURDOCH: No. There is no ill will with Senator Clinton at all. And, in fact, we have a very friendly relationship.
But I think the editorial board there and the editors felt that Obama was a real chance for something new, and we didn’t agree with a lot of Mrs. Clinton’s national policies, although we did think she had been a very good senator in New York State.
CAVUTO: All right. So, this had nothing to do with the fact that Hillary Clinton — I am not saying kowtowed, but did not make it a point to seek out the Post editorial board to explain her positions or any of this that has been rumored, none of that?
MURDOCH: None in the least, no.
CAVUTO: OK.
MURDOCH: And she is quite available to our editorial board.
CAVUTO: OK.
MURDOCH: She’s made that quite clear.
CAVUTO: Let me ask you about the writers strike, talk, sir, that we’re very close to a settlement.
I know there had been talk that Peter Chernin, your president, had been in discussions, along with Bob Iger at ABC, Disney, to try to get the sides together. Where do they stand now? Do you know?
MURDOCH: No. They are still talking. There is no — nothing that I could comment on at this stage.
CAVUTO: All right.
Is it fair to say, though, that, the more time we delay here, fall programming itself could be jeopardized?
MURDOCH: Well, if it went to several more months, yes.
(CROSSTALK)
MURDOCH: But, you know, I certainly hope it will be over long before then.
CAVUTO: OK. So, it is your belief that we could probably get this resolved, again, within the next few months?
MURDOCH: I am sure we can get it resolved, yes.
CAVUTO: OK.
One of the things they talk about, Mr. Murdoch — and you and I have chatted about this before — is, they want a slice of that Internet promise or pie, if you will. You have mentioned and Michael Eisner, the former head of Disney, had mentioned to me in separate interviews there is nothing there to that pie. They say otherwise.
But are they, in the end, likely to settle on the notion of getting some of that pie?
MURDOCH: No, we are not doing anything there. As far as we are concerned, there is nothing there at the moment. We don’t know — there may be. Well, that will be for the next time we negotiate, in three years.
CAVUTO: OK.
On to The Wall Street Journal and how that is moving along. There had been talk, as well, that a lot of the editorial, the reporters, the like, are coming to be coming to midtown Manhattan from downtown Manhattan. A, is that true? And, B, what are you going to do with them when they do get uptown?
(LAUGHTER)
MURDOCH: No, but we would like to do that. We have not worked it out fully yet.
I think, when you take over a company and you want to make changes, it is good to do everything you can to change the culture. And a physical move is a big and useful thing to do.
CAVUTO: Is that to say, Mr. Murdoch, a physical move for everyone or just the lion’s share of the editorial staff? Who? What?
MURDOCH: Oh, it would be for everybody.
CAVUTO: Oh, really? OK. So, whatever operations they have downtown, there won’t be?
MURDOCH: We would move up. That’s the — that’s the plan, or that’s the hope.
CAVUTO: OK. And by when do you want to do this?
MURDOCH: I think it would take a year.
CAVUTO: OK.
Any other changes afoot? There had been talk that you wanted to make The Wall Street Journal online subscription service a free service. I know you are going to give a lot more of it away, but it won’t entirely be free.
What is the latest on that?
MURDOCH: That’s right.
We are going to widen what we do now for free, go for a bigger audience and more advertising. But, equally, the real analysis and the depth of the WSJ.com will be developed and probably have its prices increased over time. That’s where the value is to the professionals all over the world.
We see, actually, the electronic and online possibilities of Dow Jones as being the most exciting part of the business.
CAVUTO: Interesting. On the economy right now, do you think we are heading toward a recession?
MURDOCH: No. No, I don’t. I think — I’m very hopeful. The whole world now is doing so well and is so flexible in the economies, I think things will be OK.
CAVUTO: OK. So, the slowdown that obviously was triggered initially by what happened in the mortgage- and financial-related arenas, you have not seen this spread substantially beyond, and I guess, given these numbers, certainly not in the media world, as yet?
MURDOCH: No, I can only really speak for the media world. And we’re not feeling it.
CAVUTO: OK.
MURDOCH: But we are very well equipped. We have so much which is subscription-based and not affected by advertising. In fact, all our advertising in America is less than 25 percent of our company’s revenues.
CAVUTO: OK. If you don’t mind my being parochial, I should disclose, of course, that I am part of the FOX Business Network, and I would like to think integral to making that succeed. I know you still had to deal with the startup costs associated with it.
MURDOCH: Well, the startup costs of that and of the Big 10 Network...
CAVUTO: Right.
MURDOCH: ... and of three television operations in Eastern Europe and in Asia, all startups, were in this quarter and fully paid for by these operating results.
CAVUTO: So, are those costs, Mr. Murdoch, in line with what you expected they would be? Above? Below? What?
MURDOCH: Yes. We are doing, I think, a fraction better the last figures I saw. And the business network, thank you very much.
CAVUTO: All right, because, as you know, when word leaked out about ratings, people were saying, well, they are off to a very slow start, and competitors across the river connecting Manhattan and New Jersey said, aha, they are in deep trouble.
You do not concur, I take it?
MURDOCH: Not at all. We’re — we’re very, very confident and very, very proud of it. And we thank you for your leadership of it.
CAVUTO: Well, I think there’s another guy, Roger Ailes, and Kevin Magee. But I will go ahead and take the credit, Mr. Murdoch.
Let me get your sense, as well, about the landscape, if you don’t mind going back to advertising, because that seems to be so crucial, not only for your business, but obviously, by extension, FOX Business, FOX News Channel.
You are going to have a great environment this year, obviously, with the Olympics, not that you’re carrying them, but that there is a great deal of excitement over that, ancillary advertising, the campaign, but that ‘09 is a much tougher environment, certainly by comparison. Do you agree with that? And what are your worries?
MURDOCH: No. The Olympics, of course, will cycle a lot of money out of the market.
And this is a very dynamic situation. There is money moving to the Internet, where we are very strong with MySpace and the development of social networking, which is the big thing at the moment.
It is moving around. There’s no doubt about it. And the traditional local newspaper, I think, is having a hard time. We don’t believe that will affect a big national newspaper like The Journal.
CAVUTO: I see. How about The Post?
MURDOCH: Well, the Post, we’re up 9 percent so far this fiscal year, which makes us pretty unique in the business. But we would like to be up by more, of course.
CAVUTO: On both this news channel, Mr. Murdoch, and FOX Business network, I have had the chance, opportunity, pleasure — maybe pleasure is pushing it — of speaking to a lot of politicians, who, to a man and woman, are almost saying, almost inevitably, taxes are going to go up, at the very least potentially on corporations and certainly on the upper income in this country, as the top rate likely reverts back to 39.6 percent, maybe even higher.
How do you feel about that? And are you worried about that?
MURDOCH: I’m worried, particularly about the corporate side.
Corporate taxes now are 35 percent in the United States. That’s about the highest in the world. And it’s making us uncompetitive. Maybe too many companies get loopholes or special — special deals, but, overall, we certainly are paying about 37 percent, by the time you take in around all our earnings.
But it is too high when you are competing with other countries around the world, where their tax rates on corporations are a lot closer to 20 percent or 25 percent.
CAVUTO: So, as they go lower, it’s not a very conducive environment for investing in this country, right?
MURDOCH: Yes. I think, to put corporate taxes up here, would be a real blow against American industry and American exports and everything in this country. I don’t believe that should happen.
On the personal gains — or the personal taxes, you know, it depends where you come out on that. I believe it takes away incentives. And, of course, you forget the huge state taxes that most people pay in this country.
CAVUTO: OK. Finally, as the Super Bowl game yesterday was going literally to the last few seconds, which was amazing you more, the game itself or the fact, my gosh, I have got a humongous hit on my hands?
(LAUGHTER)
MURDOCH: A little bit of both. No, we were all carried away by the game, to be honest.
CAVUTO: All right. Mr. Murdoch, I know you have many a meeting to go to. It is always a pleasure chatting with you. Thank you very much.
MURDOCH: Thank you, Neil.
CAVUTO: Rupert Murdoch, the chairman, chief executive of News. Corp, the parent not only of this place, FOX News Channel, but, of course, FOX Broadcasting, FOX Business Network. Good numbers today.
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