James Murdoch sees smaller role for newspapers

BARCELONA Thu Nov 19, 2009 12:01pm EST

BARCELONA (Reuters) - Newspapers will play a smaller role in News Corp's operations in future as the group focuses on more profitable pay-TV operations in western Europe and India, the group's head of Europe and Asia said.

James Murdoch, son of News Corp chief executive Rupert Murdoch, also said the company would remain conservative in its use of capital.

"We do not feel, looking at the overall environment, that we are out of the woods yet," he said. "We have got to continue to be pretty cautious."

James Murdoch, told an investor conference that News Corp, the world's biggest news company, expected to have smaller audiences for online news when it starts charging readers next spring, but journalism would still play a part in the group.

"In the business of ideas, which is the business that we are in, we do think journalism plays a role, and we do think there are business models there that will make a lot of sense, albeit perhaps not at the scale of some of our broadcasting businesses and other entertainment businesses," he said.

"Is it going to be as big a role? No," he said.

"Structurally, television is vastly more profitable and a big opportunity," he told a conference in Barcelona.

News Corp plans to sell subscriptions from early next year to the digital version of its Times newspaper, following fellow News Corp title the Wall Street Journal and Pearson's Financial Times who charge for access to online content.

As advertising revenues slump and circulations of printed newspapers continue a long decline, the newspaper industry is being forced to consider new business models.

Murdoch said News Corp aimed eventually to develop a wholesale market for its digital news. "Our digital activities -- we are going to push them harder but we are actually going to be charging a premium price for them.

"We will have a smaller audience than giving it away for free, but I think it is the crucial step in starting to develop a wholesale market for digital journalism."

COMFORTABLE IN EUROPE

Murdoch said his two top priorities were cementing News Corp's positions in pay TV in Western Europe and in India -- along with rebuilding the profitability of newspapers.

News Corp owns top Indian satellite broadcaster Star TV and has stakes in two cable operators.

"It is not all consolidated, there are some regulatory challenges over platform ownership and things like that, but it is a very exciting business. It can be and will be soon a very profitable business," Murdoch said.

In Western Europe, the company would concentrate on building a leading position in pay-TV, he said. It owns BSkyB in Britain, Sky Italia in Italy and 40 percent of Sky Deutschland, formerly known as Premiere, in Germany.

Murdoch said he was in no hurry to raise the stake in Sky Deutschland. "Our priority right now is to really get this thing shipshape," he said. "We are comfortable with the shareholding that we have. We do not see any urgency to change that."

Asked about Spain, where Prisa has said it was prepared to sell part of all of its pay-TV arm Digital+, Murdoch said: "I think everybody's been looking at that."

"We would not be doing our job if we had not turned our eye to it, but I think right now we are pretty comfortable with the mix that we have. We have got a lot on," he said. "We are not champing at the bit to go and buy big things."

Murdoch brushed off a complaint by rival Mediaset in Italy about a USB key it wants to distribute there that allows Sky Italia clients to view free digital terrestrial channels.

"It is a great, customer-friendly innovation. It is exactly the kind of thing you want to see coming out of a business that is constantly reinventing itself and challenging, and we think we will be able to distribute it," he said.

Murdoch said a doubling of value-added tax on pay-TV in Italy last year had had a far greater effect on the business, but called it a "one-off shock" and said Sky Italia was still adding customers, expecting to reach 5 million in the next year.

(Reporting by Georgina Prodhan; Editing by Dan Lalor)