Rupert Murdoch’s costly gamble that radio might fortify his UK empire received a boost last week when the first listening figures for Times Radio revealed that it is proving more popular than management had dared hope.
The reportedly heavily loss-making digital-only station, launched at the height of the pandemic last summer with a roster of high-profile and expensive presenters, is one of a string of strategic bets that News UK has made as the once-formidable commercial power of assets like the Sun wanes.
From paywalls to Piers Morgan, Murdoch has committed hundreds of millions of pounds trying to equip News UK, which includes the Times and the Sunday Times, to compete in the era of the Silicon Valley giants. But a chequered history of investments has dogged efforts to break with its traditional print roots and create a digitally led powerhouse.
“For much of the last decade, News UK had a reputation [within News Corporation] for this wild acquisition strategy,” says one former executive. “It was like an opportunistic bankers’ list of targets – not strategic – if it was tech and digital, it got an overly enthusiastic reception.”
The 2015 acquisition of the London-based digital ad tech company Unruly in a deal potentially worth as much as £114m, announced 10 days after Rebekah Brooks returned as chief executive of Murdoch’s British newspaper business, marked the biggest UK acquisition since the phone-hacking scandal.
A little over four years later, it was offloaded to the London-listed video ad business Tremor International for £1, with News UK recording an overall loss of £33.6m loss on the business.
“It wasn’t a good fit,” says one source. “We didn’t really understand what they did, I don’t think. The teams got on well, the cultural fit was OK, but no one quite got how to get the best out of it.”
While ultimately the big strategic decisions at the UK operation are made by News Corporation’s chief executive, Robert Thomson, a fellow Australian and long-serving Murdoch lieutenant, Brook’s close relationship with the nonagenarian means she also has significant autonomy.
The tension in the power dynamic was highlighted following the rollout of Times Radio, when Thomson was reportedly critical of the venture and said it should be shut.
“It’s News Corp, there is no open warfare, but behind the scenes it’s like Game of Thrones,” says one source. “Rebekah is like this proxy sibling. Officially Thomson of course has control, everything has to go through New York, on a factual level they are his deals. On a practical level, they are her acquisitions.”
While owning Unruly didn’t work out, News Corp may at least get some of its money back. As part of the sale, the publisher received a 7% stake in Tremor. Since then the digital ad boom has led Tremor’s share price to more than triple, cracking £1bn in market value, with News Corp’s stake surging to £74m.
There has been no such lucky exit on Storyful, the Irish-founded “social news agency” turned corporate brand management business, which was acquired for €18m in 2013. The company, which is still owned by News Corp, remains in the red, having run up losses of well over €40m since it was acquired.
“In the end the total mindset was driven by wanting the business to be more digital, to be able to say at every results meeting the proportion of revenues that were digital had increased,” says another former executive. “If you pitched any idea that didn’t advance that, it was dead in the water.”
One target became something of an obsession among the UK top brass, but unlike its parent company, it would never come to fruition: property.
“A lot of time was spent looking – an obsessive amount – on the [property] aggregator/portal market,” said a former executive. “Rightmove was too expensive, but Zoopla, specifically its uSwitch subsidiary, was a very tricky, but constant, conversation at one point.”
At the end of the noughties, Eric Schmidt, then Google’s chief executive, warned Murdoch that his plan to take the Times and Sunday Times down the paywall route that had worked for stablemate the Wall Street Journal was a doomed model for a more general news product.
Newspaper sales tumbled from 508,000 copies a day at the launch of the paywall in 2010 to 365,000 last March, when News UK stopped having circulation figures for its titles publicly audited. There has been digital growth: the titles hit a digital subscriber base of 380,000 by the end of September this year. They went from a £70m loss in 2009 to profitability by 2014.
But it appears to be losing the subscriber race with The Telegraph, which said recently that it had passed the 500,000 mark, having transitioned to a subscriber-focused model only in 2018. The jury is out on whether Times Radio, said to be losing millions of pounds a year, will deliver a big hike in digital subscriptions.
“At the time there were so many threats to the overall business and many thought there wouldn’t be a print title within five years,” says one former executive. “It’s played out as well as anyone could have hoped at the time. That business is now more profitable than it has been in living memory.”
The same cannot be said of its stablemate, the Sun, which has become Murdoch’s biggest casualty of the digital era. A paywall was erected in 2013, backed by a £30m splurge on exclusive Premier League internet and mobile rights to pull in paying punters, only to be dismantled within two years.
“The pitch was to do the same for the Sun,” said a former executive, “until Rupert lost his nerve and abandoned it. He got spooked by Mail Online and the stories about its reach and revenues. He wanted to chase those numbers.”
The Sun has been in freefall ever since, with revenues halving between 2011 and 2021. Profits of £80m to £100m annually a decade ago have turned into operating losses north of £60m. The Sun’s global monthly unique user base was 133m in September, down seven million on the same month last year. Mail Online claims more than a third more, at over 183m, as of July.
In June, it emerged that Murdoch had written down the value of the Sun newspapers to zero. And last year, in a piece of Fleet Street symbolism, the Sun lost its title of UK’s bestselling newspaper to the Daily Mail; it had been the nation’s most popular paper since 1978.
Strategic attempts to boost the business have largely failed. The most high-profile of these was the collapse of its gambling venture, Sun Bets, three years ago, with its joint venture partner Tabcorp saying the tie-up performed below expectations and paying £39.5m to end the relationship.
“The Sun is a challenged business and the company doesn’t yet have its arms around what to do with it strategically,” says Douglas McCabe, chief executive at Enders Analysis. “The brand’s confidence has been hit for sure, but it remains relevant and there are always opportunities: what might it merge with or acquire? The Sun can be a huge network play.”
Broadcast is its latest attempt to turn the tide. The biggest UK acquisition in recent years was NewsCorp’s £220m deal in 2016 to buy Wireless Group, owner of radio stations including Virgin Radio, TalkRADIO and TalkSport, which owned valuable audio rights including Premier League football. Star signings include Chris Evans, Jeremy Kyle and Trisha Goddard.
Building on the expansion of Wireless, Murdoch’s next big bet is TalkTV, a linear TV station and streaming service that aims to challenge the ailing rightwing channel GB News, with Piers Morgan its first star signing.
Andrew Neil, scarred from his acrimonious departure from GB News, recently suggested that Morgan might want to rethink his decision and “drive in the opposite direction”.
While News UK’s video ambitions will be much lower-cost than a full 24-hour channel, there will still be significant investment required, not least to secure slots on platforms including Freeview, Virgin Media and Sky. It could turn out to be News UK’s costliest foray yet.
“News UK is building an overall scale platform; ‘We aren’t just newspapers, we are a conglomerate’. You need to innovate to fly and you can’t criticise them for experimenting and looking at different models,” says McCabe. “News Corporation has always had a swagger, an extraordinary confidence, but in recent times I’m not sure News UK has quite had it. This is about getting that swagger back.”
