Lewis has an interesting but wrong-headed argument today, saying that Rupert
Murdoch is buying a wasting asset in the Wall Street Journal:
There’s a catch to the status of even great newspapers: When they lose their
readers they lose not just their profits but their purchase on the culture,
and the source of their prestige. It’s only a matter of time before even Murdoch
wakes up and realizes that the Wall Street Journal is not as glorious as he
remembers. And what then? He — or his heirs — will want out. They’ll sell
it, at a big loss, to some lesser figure. (Inferior status goods attract inferior
The Bancrofts won’t believe it now but there may come a time when they long
for the days when their baby was in the hands of such a fine and upstanding
press baron as Rupert Murdoch.
I can assure Michael Lewis that Rupert Murdoch has no intention whatsoever
of waking up one morning to discover that the Wall Street Journal he expended
so much effort to buy has become stale and worthless. Lewis’s problem is that
he’s working off a fallacy: newspapers are declining in value, the WSJ is a
newspaper, therefore the WSJ will decline in value.
But although that syllogism might work for the Akron Beacon Journal, it doesn’t
apply to the Wall Street Journal, because the WSJ is a brand, and not
an object on newsprint. Financial markets today are broader and deeper than
they have ever been, and everybody in the financial markets needs help navigating
them. That’s why Lewis’s employer, Bloomberg, is doing so well. And if Bloomberg
is one of the strongest brands in financial information, so is the Journal.
Murdoch, if he does end up buying the WSJ, will immediately extend the brand
to his forthcoming business-news TV channel, and I’m sure it won’t take him
much longer to beef up the paper’s operations significantly in the fast-growing
markets of East Asia. At the moment, most of the WSJ’s China coverage is of
interest mainly to a US audience: the paper is a long way from being a must-read
for Chinese businessmen. But the good news for Murdoch is that right now there
simply is no must-read for Chinese businessmen, which means that he
can step in with the WSJ and fill that niche.
What’s more, Murdoch gets the web, as his purchase of MySpace demonstrates.
WSJ.com can and should be a much better website, the first and last place that
businessmen and women around the world need to go for all their financial news
and information. Murdoch has the deep pockets necessary to make that happen.
If Murdoch can take the Wall Street Journal and turn it into a formidable global
brand from its present status as an increasingly-irrelevant newspaper, then
the $5 billion he’s spending on Dow Jones will look cheap. And he’ll have all
the cachet that a newspaper magnate could ever want, to boot.