Robert Thomson on the Media

Thank you, Peter.

Solomonic. It was solomonic, but unlike King Solomon, he actually did it. He actually did do it. But your question, ornamental or fundamental? I mean, certainly I'm not good looking enough to be ornamental, so better hope it's fundamental. But the issue of the split was of itself fundamental because we needed to focus on the elements of the company that would become the new news. Because with that focus comes, and it's a terrible word to use but people know what I'm talking about, synergy. That comes out of that focus, and we're seeing that on both the Fox side, 21st Century Fox, and at the new news. And at a time, clearly the word transition doesn't capture the degree of upheaval, at a time of enormous transition in media, what we half jokingly referred to as the transition from Gutenberg to Zuckerberg, you do need focus. Because if you don't, you'll get distracted. And as we've seen with media companies that have been distracted, distraction precedes death.

Well, I prefer an exclamation mark to a question mark, or some other form. I take the larger point, as it's a very fair point. And to see the demise of great papers, to know that virtually every paper and magazine from Boston to LA is basically on the market at the moment, tells you how dramatic the situation which we find it is in. You know, editorially existential moment. And I think you're right in, you know, who are the competitors. Because for 10 or 15 years as an editor, you get the question, who is your competitor? And it's an aggregation of aggregators is really what the competitor set is. Because the traditional, the Wall Street Journal versus the New York Times, doesn't for a moment capture the complexity of content competition in the contemporary age. And that's what's made the response so difficult for so many papers. And the response will differ according to where the paper finds itself on the spectrum. So for specialist papers, it's a little easier, whether it's the Wall Street Journal or say the Times of London or the Australian.

Because it's almost a virtuous vertical. I mean, it is a, what you might call a hierarchical segment which is somewhat specialist in its orientation. And it's a little easier for that kind of paper to create a community, and out of community, affinity. Affinity both in readership and advertising. It's a little more difficult for mid-market papers where the aggregation of aggregators and the competition generated by that aggregation is ever more intense.

Seven years.

Well, it is. I mean, a great many people contributed, and frankly, under Rupert's leadership, and it has been a success. We've managed to broaden the paper without diminishing its influence, in fact expanding its influence. And part of it, because when you think about what is the functional relationship you have with a specialist paper like the Wall Street Journal for the very high-end financial reader, what is the best way of getting financial news? Sometimes, frankly, it's by mobile rather than by website or by print. So you want to have a combination of both the functional and the emotional. And that building out the character of the Journal has strengthened the emotional tie both with core readers and families. And so the creation of the contemporary weekend edition, the Friday edition, the Mansion section, just in New York, the greater New York, the Personal Journal, and the Renaissance there, under a very clever team of editors and reporters, that has all added to the emotional component, which gives a stickiness to the, I mean, to be very technical about it, to the product that it didn't have in the past. And also on the web, obviously, gives you on the free side of the pay barrier, much greater audience traction. So it's been, it was when we started to recast the Journal, of course making the functional side ever better and serving that very discerning audience who knows what they need to read on a very much on a need-to-know basis. You can never fool a specialist financial reader. Yes, serving that audience, but just broadening it out in a way that didn't seem a betrayal of the Journal's traditions.

Well, the answer is yes. But it's different for different media properties. And at the heart of a lot of it is what you might call windowing. In the sense that you have to customize content in a way that makes sense to a paying subscriber, and think more in terms of membership than subscription. And you're seeing that in particular at the Times of London now, where you have year-on-year good sales figures. You have a very, where people attend a function that's hosted by the Times, the renewal rate is extraordinarily high, because they feel an affinity and understand the value. The imperative of affinity is something that newspapers have been very, very slack about. Because when you think of in an age of constant interaction, and you, not infantilism, but infantilization, where people expect immediate gratification, unless you're very conscious of the texture of the relationship and the amount of interaction you have with readers, then you'll lose them. And so creating these affinity sets has been at the heart of the Times' success and is a model that we're replicating elsewhere in the company.

Yeah, newspapers have always created communities. But when you think, was there much interaction really between a newspaper and community? Not as much as the newspapers thought. And in part, it was, what was your dialogue, what was your conversation with the community? Well, it was a letter to the editor, was a complaint about a paper not being delivered. What we've discovered is that it wasn't as textured a relationship as it should have been. And in part, that's the fault of the journalistic priesthood, where they were separate from the real needs of readers. Where journalism is meant to be providing a narrative about the evolution of society, hopefully with the objective of being objective. But instead, I think there's been a self-indulgent institutional narrative, where the priority, almost the prerogative for some journalists, has been the prize, and by the Pulitzer Prize or the good opinion of their fellow journalists. And so what essentially is an elite has focused on an elite and has lost the audience.

Well, when you think, I don't know how old you are, Peter.

Old. Thank you, Robert. But when you think, these questions are much too hard for a lovely man like you. When you look at what we watched, you know, what we embed visually as kids, you know, during the, oh, it's all very crude stuff.

And you compare that to the range of imagery, you know, some of it's disturbing, but a lot of it creative, that anyone between the age of 12 and 18 is now consuming. And that must raise the level of visual acuity to a point where if you have a conventional, traditional newspaper approach to visuals, you've lost that audience as well. You're not talking to that audience in a visual language that it understands. And that's through everything from the emoticon to the rise of video. And you think of a video now, and the debates we're having about the role of it. And I think at the moment, you know, about five, six years ago, I think it was about 5 hours of video was uploaded every minute. It's now 100 hours of video.

Well, first of all, full confession on the question of cosmetics, both Peter and I are wearing makeup for the cameras. That's full disclosure. I look, I, that's sort of true, but I don't think it's, it's partly reaction, rejection, but it's also evolution of taste among young people. And that whether it's political taste or media taste, and to be honest, the word newspaper doesn't quite capture the sense of a newspaper as a platform. You know, with the platform permutations of media now, again, it's not something I think traditional newspapers and other companies truly understood, the power of those platform permutations and how you can touch people of different ages in different ways. Because you're able to segment content and create virtuous verticals that are valuable to different audiences at different stages. But both in the way you deliver the content, in the content you deliver, and the presentation of the content, are the visuals around it, the nature of the scripting, it has to be relevant. Because if you're not having a conversation, it's a soliloquy.

Dublin-based. It's a little room in a very increasingly trendy area of Dublin. And it's a wonderful confluence of technologists and journalists. And they're using traditional journalistic skills to verify and authenticate video. Because there's a lot of video out there of dubious provenance. And if it's of dubious provenance, it's of dubious value. And so the team there, under Mark Little, an ex-journalist himself, still is in really most respects, is using the sort of skills that any journalist would use to check on the sourcing, check on the timing, and doing everything they can to then create a stream of verifiable video that's of value to the world's leading news organizations.

Exactly. It's a combination of very, very clever algorithms and human judgment about, you know, where was this uploaded, was it in the region of the tragedy, what time was it uploaded, who uploaded it, and being able to match that person against a spectrum of individuals who have a track record in, frankly, being honorable. And then reaching out to that person if you can, and if it's a very troubled region, obviously that's difficult. But both the skill set they have and the software they've created are quite unique, and which is why most major news organizations are now using them.

Yeah, it's different, but no doubt it is. But those Dubliners may ask for a Christmas bonus from you, right?

We had a property called All Things Digital, which Walt Mossberg and Kara Swisher created and did frankly a wonderful job in building up a new platform. We wanted really to bring it back more to the Wall Street Journal and put pressure on the Journal journalist to break more stories. Because the Journal should have the best contacts, it should have the best stories. But do it in a way that's one, contemporary, but two, creative in the right sense of the word, in that they're looking for new ways of reporting stories. They're more global in the way, because digital is not Palo Alto. As important as Palo Alto is in the world, and to admit it, but I have to grant the point, because you can't really understand digital unless you understand what LG and Samsung and Xiaomi in China and Lenovo and the literally thousands of Chinese software companies that have aspirations far beyond the boundaries of Beijing and India. And so, and that's what the Journal can do in a way that really no one else can. And so we wanted to channel that great editorial expertise in today.

Well, Dow Jones has great properties. And the idea behind DJX, better name a couple of them, Barron's, Factiva, Dow Jones Newswire, Risk and Compliance, Capital Markets. I mean, generally various products in that realm. And there wasn't a coherence to the content, and that these products weren't talking to each other. So the core idea is to bring together the content, so that if you're a Factiva customer, that you also have access to immediate updates from the news wires. And if you're a news wires customer, you have access to the wonderful trove of content that is Factiva. And to be very honest, we have to refine the product, the pitch, and the pricing. We're a little too rigid, and we've listened to the customers and we are going to be more flexible. And we're out there, as we speak, talking to our clients and helping ourselves understand what sort of information they need to help their business. Because in the end, you know, businesses know what's of value to them and they can put a price on them. We don't want a plethora of prices.

Exactly. And so we got feedback, and to be honest, we're responding to that feedback. And you'll see over coming months, you know, how we can make Factiva even more compelling than it's traditionally been. Because Factiva is a remarkable resource, but it's only as useful as the information that we can surface for you. And so refining search, so it's a much more professional content than say a Google search where all sorts of things are thrown up that may or might not be.

Well, I think it's true, because it devalues content. I mean, it increases value for Google. So it's not a criticism of their strategy from a Google perspective, but it is a criticism from the perspective of one who has been aggregated. And if it sounds painful, it is to be aggregated, the aggravation of aggregation. And the truth is that Google News looks like a front page, but Google doesn't really have any journalists. They're not paying those journalists. The repurposing, and I mean, the more fundamental way of looking at it is that there's been a shift in value across the content set, so that the creators of content have lost value and the distributors of content have gained in value. Whether you think of Yahoo, Google, Facebook News Feed, which is the turnaround product for Facebook on mobile. Facebook doesn't have journalists, but it has news. And so the distributors are doing very, very well, and the creators are doing less well. And so one of the questions for creators is how do you find other distribution platforms that are much more in line with our interests and are not inimical institutionally to our interests. And that's one of the things we, without...

Well, Rubicon is a company that we have a stake in, and it helps us. We've created an internal advertising network, basically. This is one of these synergies you used that dread word early on, that you own so many properties you may as well be your own sales force. Well, contemporary advertisements are two things: one, they're advertisements, and two, they're sources of data about who's visiting your website and who may or may not be clicking on the ad. And I think we've priced them as ads without understanding the value of the data collection. And part of what we're doing with the advertising network is ensuring that we keep the data, but also stopping what seemed to be an ineluctable trend downwards in CPMs, the price that you can charge for an advertisement. Because if you allow third parties to sell, they'll stack them high and sell them cheap, which is not what you want for the world's most prestigious, influential news properties, which is what we have.

Look, it's so early in the strategy. The Times of London is doing a very good job. The Sun, you know, where we now have just over 100,000 paying subscribers online for the Sun, as against a 2 million newstand sale.

All right. And it's just so early in that cycle for the Sun that I can't tell you now what the churn rate will be. I can't tell you, therefore, I can't tell you what the retention rate will be. I can't tell you what the elasticity is in that audience. But what you can see is that the idea of affinity is working. That through, so it's not just content, it's special offers that the Sun will give readers. It's in Britain, football, which is really important. So exclusive access to the highlights of a soccer game. And you don't need many highlights because they don't score many goals in soccer. But the only place you can see those goals is the Sun or the Times.

And so there's a value, people can see the value in that video, and they associate that value with the Sun. And so over the longer term, I think we're confident that that's the right strategy. And in the short term, the returns have been positive.

Exactly. Well, Rupert said when we had this spin that he wanted a startup sensibility. And a startup sensibility is to try something, to do everything you can to make it work. If after a period of striving it's clear that it's not going to work, you then have to have the courage to say, you know, this is not working. We've learned a lot. And everything I said remains very true. We've learned so much from that Daily experience about tablets, about digital migration, and the patterns of leadership that come with digital migration. And if we hadn't done The Daily, we wouldn't be in the position that we are now with tablet properties around the world. But there will be things that we should try, and some of those things won't work. But particularly in this era, if you're not experimenting within reason, and it can't always be revenue aside, but within reason, and if you're learning from the things that don't work, because if something doesn't work, you have learned something about your dialogue with audiences. You know, what is it about that that didn't quite work? As long as you're open to that, and as long as you have a culture where people are not pilloried for trying new things, then you will find after a period you have a group of individuals who are highly motivated, they're not beaten down, they've learned a lot from their experiences, and they'll be in a far better position than employees at other companies to take advantage of the opportunities. Because we talk about the challenges, but I know there are so many opportunities.

I wish I looked like a 25-year-old. All right, I wish I was paid like a 25-year-old.

Well, I think they imbibe of ego a little too much. I think the, again, it's true that there is a sense of sacredness, and it's what you might, you know, part it's Robert Redford's fault for having portrayed Bob Woodward. I mean, those of us who met Bob Woodward know that Robert Redford and Bob Woodward don't look the same, and in fact they don't talk the same. But it sort of perpetuated something of a myth about journalism, a romantic myth. And then you have what you might call EBS, which is Erin Brockovich syndrome, where journalists are chasing injustice. And of course injustice should be pursued, but in a way that's often as much about the journalist as it is about the injustice. And that is an injustice.

And I think journalism, not all journalists by any means, I mean, there are great journalists who are, you know, who are blessed with humility. But there are journalists who are so self-regarding, I think they've lost their bearings. And that...

Well, partly that, but it's a national syndrome in many respects. And it has left exposed the irrelevance of journalism at a time when media has evolved exponentially. You know, the tide has gone out, right? And what we have, there's Bob Woodward sitting on the beach. We have a lot of unemployed journalists with high opinions.

Well, actually, Storyful still relies on journalistic judgment.

Oh, very, very much so. And that's what makes it unique, the blending of the two. Because technology is powerful, but judgment is irreplaceable. It's essential. Because, you know, when does crowdsourcing become mass hysteria? You know, it's important that you're able to divine, and you know, the human is divine in the divining of, you know, do I trust this person? Do I, you know, and these are instincts, these are journalistic, these are powerful, important journalistic instincts that are an essential ingredient of what Storyful does.

Well, I was in the Guardian for a start.

Well, I'm thin, somewhat thin. That bit is accurate. I wear thin ties, my fashion sense, they may have captured that. But look, the myths around the company, as you know, are myths. There's more caricature than character. And this is a very diverse company. You look across the range of things in both the Fox group and the new news. And so the way that people jump to these conclusions about personality types and political orientation tells you more about preconception than it does about reality.

A little less than four.

No, that's incorrect. So after Japan, I became the foreign news editor of the Financial Times in London. And then the editor of the weekend Financial Times in London. And then came here, to New York, to really establish the Financial Times in the US.

It's different. It's correct. And of this company, with the diversity that we've been discussing, it's just such an eclectic experience. And each day you are discovering new things that have both a commercial purpose and a social relevance. I mean, that's the heart of News Corporation.

I am in clover, yeah. Well, particularly in Dublin. But the distinction between the two, I suppose I spent most of my life as a business journalist critiquing companies. And having critiqued them, I now have the responsibility of overseeing one. And hopefully I've learned from the mistakes and also the successes of other companies. And I have around me a great group of people. And the executives, Brian Murray at HarperCollins, you know, Mike Darcey in the UK. We have a team that, impressive people, these are very able individuals. And I'm learning a lot from them, as I'm, you know, theoretically teaching them.

News at the heart of News. But the real estate, traditionally classifieds were in newspapers, and there's a very close relationship between REA and our Australian newspapers. So these are not eccentric investments by any means. And there's a complementarity in the character of what they do. But look, we are in the midst of transition. It's going to take a certain amount of time before papers that were papers truly become platforms. And that evolution will be different for different papers in different cities. And I think that's one of the lessons, that there is no rigid template for the successful transition of a newspaper. It depends on what type of newspaper, it depends where in the spectrum, it depends what else is happening in that particular society, whether it be Perth in Western Australia or London, England. And to be conscious of the competitor set, but also conscious that the technological developments are creating opportunities. And that's, you know, we see it as threat, and obviously there's an element of threat there if you make the wrong decisions. But it is much more opportunity than threat, because the potential to touch more people, the potential for audience expectation to change around, for example, payment. Should I pay for content? And if I pay for content, what type of content will that be? You know, those things are continuing to evolve. And we freeze a frame of that evolution now, and what we're seeing is a very incomplete picture.

That's where you need great people who are talking to each other. Whether it's Mike in London talking to Julian in Sydney. But you look at how other elements of society have changed. You know, wearables. We were at CES, and you know, people were wearing clunky things. And I always think, you know, fashion before comfort, style before substance. And these seem to be neither stylish nor substantial. The Jawbone, you know, that we're in an early stage of, because at the moment people, big ugly objects that aren't actually all that useful yet, sort of a mini monument to a lack of self-discipline, that's what a Jawbone is. You know, sensors make sense. There are going to, we're going to use sensors, and both for health reasons and personal reasons. But you know, they're going to be far more subtle than they are now. But you know, that's exciting to watch. And I think we have to bring the same sort of excitement that we see at CES to the world of content.

Well, I have a 14-year-old who is. He starts at the sports pages, but that's fine. And a 12-year-old, in newspaper, he's not reading it online. Well, he reads online, but he also picks up a newspaper. Now, whether my household is representative of the world, unlikely. That may not be a fair comparison. But there is an intensity to the newspaper relationship, there just is. And you know, when you're reading a newspaper, the peripheral distractions are indeed peripheral, and you're not being distracted because you're focused. And we, as newspaper owners, have to be more articulate, more convincing about what is a real relationship, that very intense relationship between a reader of a newspaper and that content. Because there is digital distraction, it's different. And we go back to intensity, and intensity is part of affinity. And the affinity that people have with papers is something that they're passionate about. And when you talk to people about it, and it's not just old people, it is young people. And one of the things we know, when we created the Wall Street Journal app, and we were talking to Steve Jobs actually about how it should look. And I think there were some people in Apple who wanted it to be a scroll down rather than a scroll across experience. We argued with them backwards and forwards, and in the end we reached agreement because we wanted it to replicate a newspaper experience. And what we've discovered is that some young people who started with the Wall Street Journal iPad app have progressed to newspapers, because it's a progression from an app experience which is newspaper-like to the newspaper. So there's a familiarity in that experience which you would never have thought would be the case.