We love the news business: James Murdoch

At 38, he is not given to mincing words. James Murdoch, Chairman and CEO, Europe and Asia, of the $32.8-billion News Corporation, openly criticised the foreign direct investment norms in India that cap the entry of global players in the news and digital broadcasting space. In an interview with Shamni Pande he opens up on the group's plans for India. Edited excerpts:
 
What is your take on the competitive pressure on the Star channels?
I think people underestimate how competitive it has always been. The company is doing better than before, we have tremendous leadership and you can see real depth of talent… No one can argue about our durability. When we had management change in the middle of this decade, everybody started those entertainment channels. They all thought, okay, Star Plus is finished. It is not finished. We built something that is much more durable than before. We care about it and we have to invest in it.

What are your priorities?
We have redoubled our focus on India in the last couple of years. It is a standalone centre and is not part of another regional super structure. It is a business that is growing its profits handsomely and is something that we will continue to invest in. This is one of our key priority markets.

But I strongly feel the industry here is just a tiny fraction of where it can actually go with some bold leadership - from business leaders as well as the regulators. If India's economy had a creative sector on the scale relative to overall GDP of Britain's, instead of a $15-billion industry we would be talking about a $120-billion industry. Think about the jobs that come from a vibrant and fast-growing media and entertainment sector. This is an industry hungry for investment and innovation, but also one held back by restrictions. In the last few years, we have focused on our digital TV business around the world. We continue to invest in Tata Sky, we are potentially in a position of acquiring the rest of BSkyB in the UK... So, digital TV is a big priority for us. The next is the transformation of our journalism business into digital, which is going really well. We have Wall Street Journal digital and iPad editions.

Where would you want to invest or make acquisitions in India?
There are restrictions in the DTH sector. That is a problem because that sector is crying out for investment. Then there are so many restrictions on investments in journalism, digital platforms and infrastructure. I think that is pretty difficult. The more I talk to competitors, they say, we have to finally do this [remove the cap]. Actually it is people resistant to change who have put up the barriers. If we can be less tactical in trying to kill each other and think more on how we can have a deeper pool to swim around in, we are going to be much more successful.

You have Star News (Hindi). Would you look at English news now?
Look, we are big believers in the journalism business. We think it is important for our customers and we think it is important for any market to have a vibrant news sector. We are, in fact, proud to be early starters here with Star News. Prannoy Roy and Star created something very special.

Would you still be open to a dialogue with Prannoy Roy?
I talk to Prannoy all the time. And we have our partner in abp and we maintain dialogue across the news business. We love the news business and we think it is important. We do not have any immediate plan to precipitate change.

So no immediate plans in news - TV or print?
No. We have so much to do with this digital TV business-building our regional business, investing in Tata Sky, in Star Plus... When we talk about investing, it is not always about buying another company. It is actually about saying that we would rather have a lower margin on Star Plus and make sure that it is the best channel, because in the next five years that can put us in good stead.

That was how we started the channel. No one ever had put that kind of money on a game show, nobody ever thought of getting that kind of talent on the small screen. Now it is a normal thing.
 
Sports is not a restricted space. Do you plan a bigger play here outside the ESPN tie-up?
We have a 50:50, long-term, partnership with espn here. And we have done a great job in the Indian sports tv business. We are proud of that partnership. Today, looking at the World Cup you can see how exciting and transformative the sports business is and how it gets everybody in. But in all fairness, we have seen an enormous amount of inflation in the cost of sports rights, particularly in India, and frankly, we are seeing a cricket calendar here that is very full.

What about investing in the game directly, IPL?
That is a no-no (laughs)... what they say, never say never. We have owned sports teams in the past, but we are focused on our broadcast business.
  
Is the digital makeover proving to be a saving grace for the sliding print market?
I would be cautious about making any generalisations. People ask: are you bullish on print?' Well, I say: 'I like some journalism franchises and I don't like others.'  So, there are different nuances to different products in different markets. I would say that the franchises that we have in our business such as The Wall Street Journal, The Times, The Sun and The Australian...are all going through this experience to varying degrees and in different ways, pretty strongly. For The Sun, the print is not declining and we have just finished another record year in terms of ad revenues and what we are able to do is price the product in a way for advertises that we are actually competing more with TV and with mass reach events such as the X-factor and things like that.

The Times, overall, its paid circulation is not going down, print piece is going down and digital is coming up and we are now going to measure that. We know that the value of our digital customers is real. Because of the yields we get on advertising and the commitment they make. It is not an extra page view or a unique user that clicks through to one story in a month - that is not what we would call a real customer. But it is too early to call anything a day and actually this is an industry that is going to evolve continuously and higher pace than in the past

The paywall has been a positive experience?
Yes. I am trying to think of a more inclusive word than paywall, but I can't (laughs). I think it is fair-price subscription products, just like pay tv products. And I always felt there is absolutely nothing wrong in coming to an understanding between equals-the creator and the customer. We have always taken the view that we would rather have many businesses that address a smaller audience but an audience that has some sort of commitment towards us.

People in India thought we were crazy when we started the affiliate businesses of subscription for TV channel businesses. It has been lots of work and challenges that actually changed the structure of the industry. But, by being pretty dogged, we created a whole new revenue stream. Alongside us, others have come through. So, the pay business is a good business. And the newspaper business, once you start charging for digital products that look a lot like TV from a business rules perspective... that is a business we like... We like to be able to have an incentive to innovate for our customers over and over again.
  
What about the Murdochs having too much control over British media - a charge that has come up with the BSkyB acquisition?
Look, I think, in this business you will always see competitors and rivals start to stir things up a bit. The kind of opposition stories, particularly when you are growing and that is sort of a normal thing. My view, frankly, over the years is that this company had done more to create plurality in market places around the world. We are the fourth TV network around the US, contributed to the vast expansion in cable TV here in India, were there at the start of multi-channel digital TV in the UK and in Italy and in Germany. Plurality is the thing we believe in the most. When we see a marketplace that is dominated by a small set of incumbents who have not been innovating for their customers enough, we think it is an under-served market. We do not look at it as politics.

But yes, there is always going to be a bit of noise and there is inevitably noise because we are in the news business... But you have to just focus on your business and by focusing on your business, you have to focus on your customer and if we can keep remembering that is the job, then, I think, it is ok.

Do you find some new platforms such as Apple's iPad being restrictive towards media owners such as yourself?
That is a good question. The creative industry is one that has to think really hard about scale and about competitiveness over time. These firms are becoming very much part of our competitive set, they have scale unimaginable in our small sector. So, an Apple, Google, Microsoft and even Telefonica...are entities that are five to ten times the size of some of the biggest media firms globally. And that is something that (every one) in the creative space has to be mindful about, and has to think about how it can compete. Players (in the creative space) need to change their lens set and not worry about people who are getting too big. But think about how big they (themselves) can become… be able to create more jobs, more innovation of the right kind as opposed to being vastly protected, kept small, kept coded...they end up without scale.

Why did the group go back on some of the promises it made during the Wall Street Journal takeover, has it taught you any lessons? 
The key thing we learnt, is that if you invest in a product and you believe in what you are doing and you assemble the greatest people in the world to put it together, then you can make things happen - even in a sector that everybody believes is not going to work. For instance, we actually made the newspaper market grow in the US and brought new readers in. We managed to take competition to the incumbents in ways they did not think possible. Today the WSJ, is a national newspaper in the US, it is the only one that is growing in circulation. It is the No. 1, it was not so before.
 
I think, if you ask anybody, they will tell you that it is a better paper today, because it is covering national and international news in a different ways. I would argue, that you would probably hear the same thing from the newsroom floors. I think, the overarching conversations amongst the sort of journalism commentariat (sic) is one about impending, or inevitable decline and managing that and what happens next. The conversations we have in our business is about how can we change faster, what are our customers telling us and how can we make our products better and how do we actually go out there and take some risks and grow.
 
Finally, how has your father influenced you, any lessons from him?
I have been enormously lucky to grow up and learn about my job from the people around this business, particularly my father who has obviously created this business. I am very mindful of the importance he places on core set of values around the business. For us, these circle around the notion of choice and the notion of trust - trusting customers to choose, trusting in their own ability to make decisions and really choosing to empower them in whatever ways we can. That has driven our company, driven us whenever we enter new markets and take on established incumbents....