Notes: Ron Suskind and Paul O'Neill
links for 2007-06-30

Felix Salmon of Portfolio Blogs a Bit More of Our Afternoon Coffee at Strada, at Bancroft and College

Felix muses on Murdoch's acquisition-to-be of Dow Jones and the Wall Street Journal. I interject comments:

Finance Blog - Market Movers by Felix Salmon: Why Murdoch Can Make Money On His Dow Jones Investment - Brad DeLong and Paul Krugman both cogitate today on the implications of Rupert Murdoch buying the Wall Street Journal. Krugman is unenlightening: his argument is basically "Fox News is bad, therefore Murdoch is bad, therefore Murdoch buying the WSJ is bad"...

Paul Krugman may be boring, but that doesn't mean he is wrong. Fox News is bad. Murdoch is bad. Whether his acquisition of the Journal is good or bad from the standpoint of those of us who want to see a flourishing Habermasian public sphere of thoughtful and well-informed citizens depends on the exact form his badness takes, and whether it does more to undermine the good or the bad aspects of the Journal. And I think it more likely than not that the acquisition is bad news for those of us who want to see, et cetera.

Felix goes on:

DeLong is more interesting. Is Murdoch basically just a multibillionaire buying himself a new toy? If that's the case, then watch out.... Is Murdoch, on the other hand, a multibillionaire buying one of his sons a new toy? If that's the case, "then the Murdoch purchase is probably good news.".... And there's a third possibility...

the one that Salmon likes, and that he argued for. As I put it:

Rupert Murdoch thinks that in the age of new-media convergence the Wall Street Journal has the brand and the authority and the staff to make it an excellent launching pad, worth a $2 billion bet. Can Murdoch synergize the Journal's brand on TV and via new media in a way to further boost his fortune? Perhaps.... Why, Murdoch may be asking himself, should the biggest fortune be made by Michael Bloomberg and not by him?...

But, I say:

if Murdoch had a real chance at the synergies, there would be other bidders by now.

Felix Salmon parries:

DeLong's an economist, which means he's naturally predisposed to arguments which say that if some course of action is profitable, then the market would have done it already. But I think there's a strong case to be made that News Corp is one of the very few entities capable of turning the WSJ into a powerful global electronic platform.... Why? One answer is... Roger Ailes. Much as the likes of Paul Krugman despise him, the fact is that he's a visionary and a genius.... News channels are a dime a dozen; only one has managed to beat CNN....

The other answer is that the WSJ needs to be run by a newspaper company... [which] simply don't have the cashflow to invest in... domination of the electronic world.... [P]ublic companies who don't own newspapers don't have Murdoch's time horizon... as NBC Universal CEO Jeff Zucker told the FT.... It's a bit embarrassing, but true, that the 76-year-old Murdoch has a longer time horizon than a public company which will almost certainly exist in some form for many generations yet.... Yet it explains why Murdoch can profitably spend $5 billion on Dow Jones even when no one else can.

Well, I am an economist. And I am naturally predisposed to arguments which say that if some course of action is profitable, then the market would have done it already. It does seem possible that $5 billion ($2 billion net, after selling off the pieces of Dow-Jones Murdoch doesn't really want) is low enough that it makes it profitable for Murdoch but high enough that it makes it unprofitable for everybody else. But is it likely? What, exactly, does Rupert Murdoch do with the Journal to make new-media synergy money that nobody else could do in his stead?