If you think about publishers of newspapers one of the names you will easily come up with is Rupert Murdoch. His News Corp owns the New York Post, Fox News, Wall Street Journal, papers in England and Australia and HarperCollins, and other media companies. How did Mr. Rupert go from an Australian publisher to a global media baron? Micheal Wolff wrote the book The Man Who Owns the News published by Random House, NY, 2008.

In the newspaper business the business model is they are a penny business. You want to make your product as cheaply as you can, sell as many as possible which you do by pricing it as cheaply you can. There is no such thing as added value, no premium pricing. The business model is terrible except in you manage to kill off your competition – it is a great cash business. Every copy you sell beyond your base amount is profit.

Advertising when you have it adds to the cash and when it departs can be killer of the newspaper.

The other advantage of owning the newspaper or TV station in town is eventually the movers and shakers in the community will need to talk to you and some will become advertisers. The need to talk to you makes you an important player in the community. The reality is in most communities nothing happens without a systematic program of influence among the people with influence. Part of the program involves the media person.

When Mr. Murdoch took over the Adelaide News, his bank was National Bank of Australia, it already had dealings with another bank. Eventually Murdoch moved the account to the Commonwealth Bank of Sydney to fund his dreams. In a short time, Murdoch is one of the biggest clients as with the new relationship he has expands his media properties with bank debt. Each time has assets increased so did his bank debt, till he had enough properties to ensure the cash flow to pay his debt.

In the book, it seems Mr. Murdoch did not really have a plan to branch out to become a multi media company. It seems that because others did not like him, he did it out of spite and found methods to go around the establishment. In many ways, although owning newspapers puts you into the establishment, Mr. Murdoch did not think himself as such but he was interested in the ownership. When the book was written, Mr. Murdoch was not a connected internet person (he prefers paper) and had no internet strategy, if his businesses are to survive that needs to change.

Linking to dividend paying stocks, the growth of any company is a combination of desiring to grow and having financial resources to grow (or financing available). In many businesses the first generation has the most desire and then slowly financial managers set in to run the company as the next generation enjoys the dividends. We have seen over the past few years particularly in the media business the drastic change as we consumers have changed. From TV to desktop computer to laptop to mobile is a big change and we all have embrace some or all of it. The media companies are still trying to figure it out. Media is something that still sells to the every person, although it can be highly segmented and that is why it is interesting and also can be profitable to own.

There are more questions than answers, till the next time – to raising questions.