Is the Sun setting on Murdoch’s global media empire?

After losing its confidence and its chutzpah, it is losing circulation and cash at an alarming rate. Having dropped out of the Audit Bureau of Circulation remit (along with the Times and Sunday Times) just as the Mail overtook it as Britain’s biggest selling daily paper, it now regards sales figures as a “commercial secret”. Finances are dire, too. Last year the Sun and Sun on Sunday lost £200m, compared with a loss of £68m the year before.

News Corp’s official audited reports published last August (*see below) don’t detail individual titles, so we had to wait until this week for the News UK titles to release their figures – 50 weeks after the end of the financial year.  They showed that while the Times and Sunday Times managed a pre-tax profit of £10m, the Sun was in such a bad way that its value was written down to zero.

This financial meltdown is in turn leading to a “safety first” approach that is taking the zing out of editorial: “We simply cannot afford to lose money and sales by rocking boats,” as one journalist put it. “We need to hang on to every penny we can get.”

And so, Sun readers are offered an anodyne diet of stories about when they’ll be allowed to go to the pub, soap star trivia and a slavish devotion to Johnson that irritates many staff. How did it come to this? Fear. The rabbit-in-headlights fear that paralyses.

Phone hacking (although to this day the company insists that it never happened at the Sun) and Operation Elveden, which saw a clutch of journalists put on trial for paying public officials for stories, coupled with wokeness are important factors. Training policy insists that journalists confirm that they have read and understood a strict code of conduct and editorial policies, particularly on privacy, while newly-hired diversity and equality monitors assess journalistic output.

There is a belief on high at London Bridge headquarters, doubtless rammed home from the higher-ups in New York, that the world is changing and News UK must change with it. That all sounds laudable, but there is a commercial aspect: with a desperate struggle to keep advertising revenue, the last thing the firm wants is for the Sun to get embroiled in a Twitterstorm that will provoke a woke backlash and spook advertisers.

But surely every newspaper should be operating under these sorts of standards? Yes, but successful papers – as exemplified by the Mail – are still willing to go out on a limb, to challenge the powers-that-be; the Sun is running scared. As one journalist said: “If you constantly ram down the throats of reporters that they will carry the can if things go wrong, it hardly encourages anyone to push the envelope in cracking an important story. Remember, this is the company that handed over its own journalists to the police. If it goes pear-shaped, we can expect no support from Murdoch.”

Ah, Murdoch. The Sun King. The ultimate media magnate. Everyone conflates News UK, Fox, News Corp et al with Rupert Murdoch: Fox faces billion-dollar lawsuits = “Rupert’s in trouble”; the New York Post is accused of publishing fake news = “Murdoch propaganda”. Times Radio is tanking = “Murdoch’s lost his touch”. But how much is he involved? If parts of his empire are crumbling, is it his absence or his lingering presence that poses the bigger problem?

Take Andrew Neil’s GB News television network, for example. It goes on air next week, while News UK’s TV station, which would have aimed at the same Fox-style right-of-centre market has been pulled – or at least reduced to a limited streaming service – at the last minute.

This is so un-Rupert. After a lifetime spoiling for a fight with the BBC, to invest in studios, expensive star hirings and then walk away just at the moment the Beeb is on its knees over Bashir is extraordinary.

But it may also be the key to why things are going wrong. Murdoch’s USP has always been his daring decisiveness, taking huge risks on seemingly extravagant ventures and deals – even jeopardising the entire corporation as he did with BskyB. But that has gone; the wheeler-dealing days seemingly over. There have been a welter of multimillion media deals in the past month, involving the likes of Verizon, Amazon, Buzzfeed, Forbes and the New York Times, but where was Murdoch? Fox (the broadcasting business the family kept when it sold 21st Century Fox to Disney) bought a small sports site, but his businesses were nowhere near the big action.

Selling rather than buying seems to be the name of the game these days, as 90-year-old Rupert spends his days quietly in the Oxfordshire countryside with wife Jerry. He doesn’t even make those daily nerve-stretching calls to editors any more – they are now more likely to come from News Corp chief executive Robert Thomson.

Which all takes us into the realms of the HBO series Succession, with the suits and siblings having different ideas from the grand old man of what the company should be and who should run it. Without a clear future strategy, the Murdoch empire could be ripe for the picking once the emperor finally leaves the stage.

Green son James has abandoned the business over climate change, daughter Elisabeth has her own TV enterprises and heir-apparent Lachlan has gone walkabout in Australia, although he still runs Fox. That leaves former Times and Wall Street Journal editor Thomson calling the shots from New York and former News of the World and Sun editor Rebekah Brooks running the show in Britain. Murdoch regards both almost as family – he gave Brooks away at her wedding and, with her at his side, famously answered “this one” when asked what his top priority was when the hacking scandal erupted.

They may harbour ambitions for even greater power (although Elisabeth may have other ideas about Rebekah, having told her she’d “****ed the company”), but even though both ran Murdoch newspapers, the portfolio might still be vulnerable in either of their hands. Neither has the ink running through their veins as Murdoch does; they inhabit the digital age.

Today’s News Corp is a very different beast from the one Rupert created and nurtured. Lumped together across three continents “news media” may still be the biggest generator of income, but Dow Jones, video streaming and even online real estate services are of increasing importance. And the newspapers are morphing. The message in last year’s annual report was clear: “digital-first brings cost reductions”; Australian “storied print editions” – that means local papers – are closed; “digital reincarnation of titles” is the objective.

Dear old Rupert was so slow to pick up on the internet and when he did, he didn’t know what to do with it. Look at the Sun’s “strategy” – probably too strong a word – as articulated by one who lived through it: “First it was treated as a poor relation to the printed paper. Then it went behind a paywall – disaster. Then the paywall was dropped and the idea was that the website would drive people into buying the printed paper. But this is not how the market works. Nobody reads Sun Online for free and then says ‘I must rush out and buy a printed copy’. Meanwhile, Associated had worked all this out from the start and MailOnline was romping out of sight.”

News Corp now claims that the Sun is the UK’s most-read online news brand. Indeed it is, if you ignore the BBC and if the measure is “monthly unique visitors”. Even then it is being challenged by the Mirror. But both trail the Mail, Guardian and Express by other metrics. There are so many measuring sticks – print sales, subscriptions, unique users, monthly visits – that it’s like juggling apples and oranges. And anyway, even by its chosen yardstick, the Sun had shrunk from 164m to 119m viewers over the year to March.

The Times and Sunday Times are having more success with their subscription models, so that after decades of being propped up by a couple of swaggering redtops, they now provide the crutches for their surviving but wounded tabloid stablemate.

So what does the future hold? The first indicator could come with a change of editor at the Times. John Witherow, who has occupied the chair first at the Sunday and then the daily since 1994, will be 70 in January, so retirement does not seem an unreasonable notion. Brooks is said to have some people in mind, but favourite must be 57-year-old Tony Gallagher, whose CV includes being deputy editor at the Mail and editor of the Telegraph. As one observer asked: Why else would he have moved from editing the Sun to be No 2 at the Times?

The titles seem secure because they are influential brand assets, like the current Dow Jones/Wall Street Journal golden goose. Still, they are almost bound to go “digital first” and most likely merge into seven-day publishing with all the attendant cost savings – providing legal hurdles can be overcome, possibly with the help of a friendly government. If this is on the cards for the next two or three years, it – along with the nobbling of the BBC and attempts to tame Facebook and Google – may be the explanation for the cult of Boris.

After all, Murdoch has always been the loudest cheerleader for those he backs – and from whom he wants a business or political favour. Hurrah for Maggie! (Sky); Hurrah for Blair! (don’t join the euro); Hurrah for Dave! (Brexit referendum).

As to the Sun? It is doubtless seen in New York as all pain and no gain, but it’s Rupert’s baby and so as long as he breathes, it’s probably safe.

In a way, the paper has become a metaphor for the man himself: badly under-estimated at the start, it enjoyed explosive growth through brash brilliance and bravado, surviving big setbacks along the way. But then misjudgments crept in and it started to run out of steam as rivals seized modern technology it didn’t understand and eclipsed it. Now it faces a twilight of dependency on any patent remedy that might eke out a few more years before the inevitable final sunset.

They may be monsters, but we’ll miss them when that day comes.

NEWS CORP BY NUMBERS

The Sun made a pre-tax loss of £201m last year, with phone hacking payments reaching almost £90m, according to figures released on Friday and the value of the paper has been written down to zero.

News Corp’s financial year runs from July 1 to June 30, so these figures are 50 weeks out of date and there may be even worse news around the corner.

The News Corp annual report was published last August, showing the performance of the company’s various divisions, which it calls “segments”. Dow Jones, and with it the Wall Street Journal, were given their own segment last year “in the interests of transparency”, while all other newspapers and radio stations are lumped together under the banner “News Media”.

Circulation/subscription figures are given for individual titles, but when it comes to finances, the segment is sub-divided by national company, so that until the Sun released its figures today, it was impossible to see which title was responsible for which gains/losses.

The annual report says that the Sun’s paid circulation averaged 1.09m between January and June 2020, according to “internal sources”. The figure for the Sun on Sunday was 934,000, for the Sunday Times 610,000 and for The Times 322,000. The report highlights the increase in Times subscriptions and describes the Sun as the leading online news brand with 164m unique monthly visitors. By the March quarterly report, that had fallen to 119m.

News UK employed 4,500 staff. Today’s Sun release shows that the paper had 546 staff in June last year, down from 605 the previous year. Directors were paid a total of £4.6m and the highest-paid director – almost certainly chief executive Rebekah Brooks – received £2.4m.

Phone hacking, categorised in News Corp reports as “UK newspaper matters” arising out of “certain conduct at the News of the World”, cost £88.7m in compensation and costs – and there is no end in sight. Claims are still being settled – only yesterday a further payment was made to former Lib Dem MP Simon Hughes, relating to a Sun splash. This is significant, since Hughes had already received a pay-out over a News of the World story and the company has always maintained that there was no hacking at the Sun.

News UK revenue for the year was $898m*, down $134m (13%) on 2019 and circulation and subscription revenue fell by $34m “primarily” because of falling sales of the Sun.

Subsequent quarterly reports show that News Media income across the UK, US and Australia fell by between 25% and 33% compared with the same periods in the previous year, but this is not broken down by country.

Figures for the Times and Sunday Times, published simultaneously, suggest that the editors John Witherow, Martin Ivens and his successor Emma Tucker – along with accountant Michael Gill – were paid £3.2m between them.

*As an American-based business, News Corp publishes its figures in dollars; the News UK figures are in sterling.

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