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Rupert Murdoch’s bid for Yahoo: The final puzzle piece in a daring plan to dominate news in the English-speaking world? 6/20/07

Posted by Steve Boriss in Murdoch, News Corporation, Yahoo.
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Jeff Jarvis, Staci Kramer, and the Times’ (both here and there) have offered intriguing speculation on why Rupert Murdoch’s News Corporation and Yahoo are suddenly showing an urge to merge. Are we about to watch giants play musical chairs with the very hot search engine, social computing (e.g. MySpace), and widgets businesses?

Actually, I think it’s much bigger than that — possibly something that would change the world as we know it. But to understand it, you have to look at this from the perspective of the power player here, Rupert Murdoch. Over the past few years, he has been slowly but surely collecting all the pieces necessary to dominate the news business in the entire English-speaking world. The News Corporation empire includes newscasters (Fox News Channel, Sky News), newspapers (The Times of London, New York Post, The Sun tabloid), radio news (Fox News Radio), sports and entertainment properties (Fox Sports Net, 20th Century Fox films, Fox Broadcasting), local news (Fox TV affliliates), and social computing news of friends and family (MySpace).

In fact, the only two pieces of the news puzzle that Murdoch is missing are business news, which his bid for Dow Jones would address, and Internet news, where he is weak. Now, look at this list of the top 15 news web sites (scroll down). Where’s Yahoo? Ranked #1. Also, note Yahoo Weather at #6 and Yahoo Local at #14. Where’s News Corporation’s Fox News? Only at #10 behind CNN, MSNBC, the NY Times, Google News…even the Drudge Report. So, a deal with Yahoo can leapfrog Murdoch into the top Internet news slot.

But Murdoch’s plan might even be more clever than that. The backbone of news as we know it is the nationwide network of metro daily newspapers, who collaborate (some would say, “collude”) through the Associated Press (AP) network. They created the not-for-profit AP, they own it, they contribute stories to it. And, they all feed out of the same AP news trough. If the AP did not exist, the reporting costs of these papers might be too high for them to survive.

Now, looking again at the top 15 news sites, where is the AP network of newspapers represented? Actually, it’s at #1 because Yahoo News has a deal with the AP to run their stories. Where else do these AP stories appear in these rankings? Pretty much nowhere. Among the relevant sites that don’t generate most of their own content, Google News draws from a multitude of news providers, and AOL is part of the Time Warner empire that includes CNN. So, if News Corporation replaces AP’s stories on Yahoo with its own, and the Internet becomes the dominant news medium, Murdoch might be able to seize control of the “national conversation” from the AP network of newspapers, and at the same time deal a crushing blow to what has been the backbone of the mainstream media.

Love him or hate him, Rupert Murdoch is a force to be reckoned with. And if he has any peers in the news business (and Arthur Sulzberger, Jr. of the New York Times is surely not one of them), I do not know who they are.

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