Rupert Murdoch on Dow Jones Deal

This is a rush transcript from "Your World with Neil Cavuto," December 13, 2007. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: Now, though, to another big player today, having nothing to do with baseball, even though, for a while, he did own a baseball team. That was then. This is now.

Today, he officially took over a different team, a team that, for the better part of the last century, was under the control of a single family, again, as I said, until today, when Rupert Murdoch's quest to make Dow Jones his finally got the approval of a healthy majority of the company's shareholders, including a majority the Bancroft family, some of whose members once fought Mr. Murdoch tooth and nail.

Now lock, stock and barrel, The Wall Street Journal, Barron's, MarketWatch, Dow Jones itself, it's all his and his News Corporation, all that the largest and most influential media company on the planet.

With me now, the chief executive of News Corp. and my boss — so, I got to be real careful here — Rupert Murdoch.


CAVUTO: Mr. Murdoch, very good to have you. Congratulations.


CAVUTO: This is something that you have always wanted. Sort of like, ahead of Christmastime, you got your toy. What do you think?

MURDOCH: Well, you know, for several years, we thought about it. But we thought it would impossible. Then, a couple of years ago, I heard there may be a couple of cracks or a possibility of...



CAVUTO: You never gave up on it, did you?

MURDOCH: Oh, no. You never stop thinking about things like that.

CAVUTO: Right.

Now you have got this marquee brand. What are you going to do with it?

MURDOCH: Well, I think it's already the best financial paper and a wonderful — a wonderful institution in this country.

But we want to make it absolutely the preeminent source of financial news and information and comment in the world. We have got to globalize it. We have got to digitize it. There is a lot to do.

But the paper itself will be the flagship, of course.


CAVUTO: The paper, The Wall Street Journal, itself?


CAVUTO: When — when you offered $5 billion to buy Dow Jones, many said you were paying a lot of money for effectively what was a dinosaur. You argued otherwise at the time when you and I were chatting.

Are you still convinced, in the face of the economic slowdown, some argue maybe worse, advertising and both the classified and general side not looking great, still feeling that way?

MURDOCH: Well, we don't have much classified, and I don't know what is going to happen next year.

But we do these things for the long term. And we think this is a very, very great asset. We are seeing in the world today huge creation of wealth, maybe not right now in the United States. But, you know, there's 100 million people a year coming out of poverty, creating things. And there is going to be, you know, a huge hunger and a need for financial and business information.

And, so, we think it has got a great future.

CAVUTO: You are planning to run, I guess, Mr. Murdoch, an ad how News Corp., to the point, has been defying conventional wisdom, much like the wisdom I told you at the time you first made your offer for Dow Jones. And — and we have discovered here, our crack team at FOX, that The Financial Times is not going to run this ad tomorrow.

MURDOCH: Or the People's Daily.

CAVUTO: Right. The New York Times is, but not The Financial Times. What did you make of that?

MURDOCH: I think they're a little oversensitive. If I was them, I would have taken the money.


CAVUTO: So, if — obviously, if I am The Financial Times, I am thinking, this guy is the biggest threat we face. What do you think?

MURDOCH: Well, yes, but, you know, the — the real paid circulation of The Wall Street Journal is four or five times that of The Financial Times. And it is a very much bigger thing.

In this country, it's 10 times as big. This is much more American- centric at the moment. But, as we get around it, we will develop the international editions and compete with The Financial Times in Europe and in Asia.

CAVUTO: What about here in the United States, where The New York Times sort of has that brand prestige? Sometimes, I wonder why, but it does. Is that your real goal, to not — not to take The New York Times, but take them out?

MURDOCH: No. Well, we're already, in the circulation, 50 percent bigger than The New York Times. Our readers are more influential, wealthier. We are a very much more attractive prospect to advertisers than The New York Times is.

On the other hand, it has been running general news. It's got an organization there 150 years old. It has a huge habit buying it around the country on a Sunday. You can't just take it out like that. But it will be competing with us, and we will be competing with it for sure. But we are a long way in front now.

CAVUTO: All right. The Wall Street Journal, of course, is the base of all those prominent financial advertisers. I guess The New York Times gets the Hollywood guys. It gets more generic brand type advertising, prestige, luxury brand type advertising, not that The Journal does not, but The New York Times is associated with more of that.

Is that part of what you are going after, too?

MURDOCH: Oh, sure. We will go after advertising, absolutely.

And we will probably — already, you know, there is a great deal of news from Washington and around the world in The Journal that is not strictly financial. We will expand that, but not at the cost of what we're doing with the financial community and the business community in the world.


You have been busy meeting with a lot of Dow Jones folks, Journal folks, Barron's folks, editors. You have gone, I think, to the printing press in East Brunswick, New Jersey.


CAVUTO: They were impressed with how well you knew the details, the most minute details, of the operation. So, you have been very, very busy. What has the reaction been?

MURDOCH: Oh, I think, at first, there's nervousness. There always is with change. There was a little hostility. I think that has died...

CAVUTO: Really?

MURDOCH: That has died down.

CAVUTO: When you say hostility, what did you encounter?

MURDOCH: Well, they read The New York Times and say, old Murdoch, you know...

CAVUTO: Right.

MURDOCH: They don't like FOX News. The New York Times has, you know, a different world view of things...


CAVUTO: But among the people you met with at The Wall Street Journal or Barron's?

MURDOCH: I would say the great body there are extremely friendly and welcoming and keen to get on with it. Naturally, they must be a little bit nervous about how it will affect them individually, what will be expected of them. But the great body of people there love to see someone coming in, saying, hey, we want to develop this business, not break it up and sell it off or cut it down.

CAVUTO: You obviously want to recruit big names to come to the paper, papers.

MURDOCH: Well, no, big talents. We are quite happy to create new names.

CAVUTO: OK. Who might they be?

MURDOCH: I don't know. We're going to find them.


CAVUTO: But you're looking for them?

MURDOCH: We are looking for them.


CAVUTO: Would you be looking for them at The New York Times?

MURDOCH: There are some very fine journalists there we would be happy to have, but, I mean, equally there are in other newspapers. I don't want to be too specific.

I mean, they have been trying to steal, without telling us, some journalists from The New York Post. And The New York Sun is a very obvious place where are there some very fine journalists. It's a small paper...

CAVUTO: Right. Right.

MURDOCH: ... and a new one — but all over the country.

And, you know, it is amazing. We are looking for good writers. In the film business, we recently found a lady blogging. We thought it was very well-written, what she was blogging about, and amusing. It turned out she an ex-stripper. And we thought that she would love to do a film. And we have just produced it for very little, and it's — it looks like being a real hit called "Juno." It is a beautiful film.


MURDOCH: So, you never know where you're going to find the talent.

CAVUTO: You never know. You never know where your talent is.

Speaking of the writers and the writers strike, obviously, for a big movie-maker, TV player, the longer this thing drags on, I am sure the more you worry. What's your gut tell you about how long this drags on?

MURDOCH: My gut tells me it's not going to last as long as everybody says. But, if it does, it does. We're prepared to. No one likes strikes. It leads to bad feelings on both sides. But, after a while, it also needs to weariness. So, I would be hopeful we will have everybody back at work fairly soon, but maybe — maybe a few months.


CAVUTO: A few months.

The reason why I ask, sir, is, I was at a conference with Michael Eisner, the former Disney chief, who was telling me in a session we conducted together, this strike is stupid, Neil, that these writers are trying to get a piece of action that is not there. I'm paraphrasing, but the idea of trying to get something on the Internet or a stake on something on the Internet that is not there is a waste of their time.

What do you think of that, since the writers seem to be focusing on that?

MURDOCH: No, I think that is pretty right.

But every strike has its — has its own life. And it started off that way. And then it moved on. And now the rhetoric is, you know, big, fat companies, and us poor writers, as though it's they really want to change to some sort of socialist system and drag down the companies.

They will get through that. There's just a few people getting the headlines at the moment. But the rhetoric changes as — as time goes by.

CAVUTO: So, those writers who are trying to say the Internet is going to be their holy grail, you don't think it is?


CAVUTO: Interesting.



So, as far as delaying down the road, we know how — it's effect on TV. But even delaying movies, can you see that happening at this point?

MURDOCH: Not yet. Not yet. I mean, I think, if it goes for another 12 months, then certainly.

But everybody has movies in production today, and, you know, pretty full slates of movies well along the way to being produced, don't need any more writing, which will take us 18 months forward. So, I think that is some time away.


Let's talk a little bit more about The Wall Street Journal again and the environment for financial news. We talked about the collective world for print advertising is not as promising. But you were intrigued very early on about the success The Journal has had online, and that you were one of the first not to jump into the Internet early on.

When a lot of people did and lost a ton of money, you were very strategic, almost surgical, about where you place your bets. And the one thing that you marveled at, at the time, Mr. Murdoch, was The Wall Street Journal makes money off that online site.

And now you are looking at the possibility of making it free. How does that help you?

MURDOCH: Well, because we expect to get much — at the moment, we sell it to about one million people at a theoretical $50 a year.


CAVUTO: That is The Journal online site?

MURDOCH: The Journal, yes.

CAVUTO: Right.

MURDOCH: But it costs probably — of that $50 million, $15 million is in costs of just getting subscribers and looking after them. So, it's $35 million.

We think, when it goes from one million subscribers to 20 million people watching it around the world, that there will be more than enough advertising to make up the difference.

CAVUTO: Can you see a day...

MURDOCH: It may take a year to get there, but we will get there.

CAVUTO: Right.

My daughter, Mr. Murdoch, does not read a physical paper. Everything she reads...

MURDOCH: Shame on you.


CAVUTO: Isn't that amazing?

She reads online. Everything is online. And I know content is king and all of that. But can you envision a day or a whole generation that is never picking up this?

MURDOCH: Well, there is a generation now of people under 30 who are reading half as much newspapers as they used to.

CAVUTO: She insists she is still reading.

MURDOCH: They're still watching television.

CAVUTO: She insists she is still reading, but not the physical...


MURDOCH: Yes, but she is only reading a little bit that is served up to her that she wants.

CAVUTO: Right.

MURDOCH: And she is missing this great array of news and things that are going on in the world. And I think this is — I hope — a temporary stage. But it is real.

CAVUTO: Well, what if it is not? How do you capture her?

MURDOCH: That's our challenge. We are all working at that. How do we get young people back reading, enjoying newspapers?

And one of the ways, I think, is to make the newspapers better and more accessible and more exciting.

CAVUTO: So, in the case of The Journal, a couple of things that have kind of leaked out over the past few days, Mr. Murdoch, is that maybe you make the articles shorter. In other words, they don't continue from the front page into the interior pages, that everything is truncated down.

Is that true?

MURDOCH: Well, truncated is unfair.

I just think you can — you know, with good editing, you can certainly say things in fewer words than is normal. But you can break stories in parts, too. You can have the guts of it and the strength of it on page one, and there, and then you refer to other aspects of it inside, which are separate stories, and can keep the paper busy and so on.

But we will be experimenting with this in various ways.

CAVUTO: Now, the Journal and Barron's, Dow Jones in general, have been running all these surveys from economists and others who are predicting a slowdown, at the very least, a healthy plurality even a recession, even with the Fed's recent cuts.

Are you worried?

MURDOCH: Oh, yes. I think we are in for a recession, probably.

How bad it will be, I don't know. But I think there's a lot more bad news to come out of...

CAVUTO: Bad news where, on the mortgage?

MURDOCH: European banks, insurance companies, pension funds. These things always start with housing booms.

And it takes some time, a year or two, for an economy to come right through it, probably five or six years for the real estate market to come through it.

CAVUTO: Five or six years?


MURDOCH: That has sort of been the history of these things in the '60s and the '80s.

CAVUTO: So, that would mean another — at least another three years of this.


MURDOCH: No, I think — yes. I think, you know, in terms of banks cleaning up their balance sheets and getting back into lending and so on, I think that's only about a year or so.

The problem at the moment is, there is plenty of money everywhere, but the banks are frightened to lend it. And, therefore, it is harder for small-business men to get started. And so — and that's what have to watch, and the price of money. The banks are being so sort of super careful. They have had a big fright.


CAVUTO: Well, as have prospective borrowers, right? They're — even those who would normally qualify relatively easily, they are backing off, too.


MURDOCH: Well, I don't know. We just borrowed some money the other day. We're an investment grade company. And it was done on the telephone for $1 billion dollars. It was no trouble.

CAVUTO: Yes, but I am not talking about borrowers like you, Mr. Maryland. I am talking about average borrowers who are just sort of saying, we might in fact qualify, but we don't know if we want to. We think this whole environment is sort of like a falling knife.


MURDOCH: If there's a lack of business confidence, that's a problem.

CAVUTO: Right.

MURDOCH: But I don't think we are too close to that yet.

People talk — I was seeing the debates today — about jobs going overseas and so on — I thought disgraceful things. There is no one in America who wants a job who can't get one. We have got a state of very near full employment here. The country is doing pretty well.

CAVUTO: All right.

Now, also, in that debate was this view you have to rectify the boom for the very wealthy guys by raising taxes on them. And to a man and one woman in that debate, they still want to do that, raise taxes on the upper income.

What do you make of that?

MURDOCH: Well, I understand it. I don't agree with it.

I think that the — the history of all tax raises has been to slow economies, to slow enterprise. The fact we have got through the last eight years so well and come out of the slump that President Bush inherited from the end of the Clinton years is due to his big tax cuts.

And, sure, we had deficits for a while, but you watch the way business has improved, and now the deficit is down to less than 1 percent of GDP, we are fine. I think what this country needs today is another tax cut, rather than lower interest rates. We may have to have higher interest rates for inflation. But the main thing is to get — is to get people spending and to get people investing.

CAVUTO: I don't know if you have had a chance to watch this great new business network that is on, FOX Business Network.

MURDOCH: I have heard of it, yes.


CAVUTO: A fellow you know, Warren Buffett, was on that network, saying, the rich should pay more, and — and that will go a long way toward addressing our future needs, with very little damage to the country. He points out the fact that, when President Clinton raised the top rate, what followed was a boom.

And he says, in fact, super-rich guys like himself and, I guess, by extension, you, have an obligation to do that.

What do you think of that?

MURDOCH: We all have an obligation to pay our taxes. But, you know, Warren — that's nice, if you could trust the government with it. He spends it separately on charitable organizations, which is very fine. But these things need a little examination.

CAVUTO: That's an interesting point, right? When he had his chance to give money...

MURDOCH: To the government.

CAVUTO: ... but he gave it to Bill and Linda Gates for charity. He didn't give it to Uncle Sam. So, you think that a low tax environment is the best environment?

MURDOCH: I think for everybody.

CAVUTO: OK, so picture this. I don't want to get you too deep in politics, I apologize. If we had an environment where taxes likely go up and we have this recession that you envision, you're in a business that depends on advertising. It depends on a lot of things where a good economy is a sort of nice underpinning. You might not have that. A year or two out, are you worried?

MURDOCH: Oh, sure. I think every business is worried that we have a lot of tax rises and a lot of — and it goes into social spending, rather, and infrastructure, things like that, it could slow this country down badly. And you know, we are in a very competitive time with the rest of the world. And it's most important that we keep our growth going.

CAVUTO: OK, for the Wall Street Journal, back to your big purchase, consummated today, is it fair to say that the environment for anything financial, even in a slowdown, will still be strong? Because the appetite coming from these developing countries might offset what's happening in the developing countries?

MURDOCH: Yes, I think they have an effect, certainly. This is a different time. We really do have a global economy today. And big parts of the world are expanding very fast. And that's why I think it's shameful to see some of these candidates pandering and talking about having protection and not having imports and it kind of give jobs away. It is just not true. And what's more, most of them know it.

So — we had Bill Clinton, who was a great free trader, Bush has been a great — Mrs. Clinton has suddenly discovered the joys of protection. And I think that's — it's something to be regretted.

CAVUTO: Could I be of selfish interest, since I should disclose here on part of the players trying to make your Fox Business Network succeed, how important will the Wall Street Journal will Dow Jones collectively be to building up FBN?

MURDOCH: Oh, I think they'll build each other, they'll help each other. You know, at the moment, there's a standing agreement with our competition, but that will run down or run out and we'll be able to put the two together more and more.

CAVUTO: All right, the standing agreement you're talking about is where Wall Street Journal reporters' contractual agreement with CNBC, I think that's the name of it.

MURDOCH: Yes, but it doesn't stop a lot of them, we're counting on...

CAVUTO: Right, and many have.

MURDOCH: ... on to FOX, as they have.

CAVUTO: Would you ever envision changing the name?


CAVUTO: So, FBN stays?

MURDOCH: By the time we get to this, FBN is going to be so well known for what it is, you don't want to play with the trade mark.

CAVUTO: What's your early read on FBN?

MURDOCH: It's going well. We're going to probably stock next year around 40 million subscribers when we get a breakthrough.

I don't know Roger's — Roger Ailes' latest projections, but it's going to be three or four years to get the distribution that it took us seven years to get with FOX News.

CAVUTO: And he has a pretty good track record in that regard.

MURDOCH: He sure does. And we have a great prospect of doing very well.

CAVUTO: Could I ask you this?

Can you envision — there were a lot of people — I remember this, since I was here for the beginning of FOX News Channel, Mr. Murdoch — who — cable systems that were reluctant to carry FOX News that eventually had to face this clarion call.


CAVUTO: Get FOX News, get FOX News.

Can you envision the same for Fox Business?

MURDOCH: Absolutely, it's got to be so good that people hear about it, and they see it when they travel, they demand it. And I think that's certainly going to happen. it's certainly — no question it happened with FOX News.

CAVUTO: All right, now, as far as Fox Business Network ...

MURDOCH: We were just putting the price up a lot at FOX News to the cable companies.

CAVUTO: That's right.

MURDOCH: And you know, if they want to, they can cancel it, because the contracts are up, or they can pay the price. And no one would dare cancel it because people love it so much.

CAVUTO: Interesting, I remember when a lot of people thought you and Roger Ailes were crazy when FOX News Channel started because they said well, you can't have three news channels. It won't work. Yet lo and behold, 11 plus years later, we have three news channels. Can you envision a long period of time where you had two — actually, three business networks merrily going on, doing their thing?

MURDOCH: Oh, sure. Well, some will do better than others. And it depends on the interest in business. I mean, it's a more niche thing, business. It has a smaller audience, it's more influential, it's better off.

CAVUTO: See, that's what I tell Bill O'Reilly. I tell him it is a smaller audience, but it's more powerful.


CAVUTO: He laughs. I can't get him to stop laughing.

Mr. Murdoch, again, congratulations.

MURDOCH: Thank you.

CAVUTO: Much success with this.

And we look forward to working with The Journal, Dow Jones properties...

MURDOCH: Thank you, Neil.

CAVUTO: ... in the weeks ahead.

MURDOCH: Thank you.


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