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Strategy Breaks Eggs

By Stuart Crainer and Des Dearlove

Brightline Initiative BlogIn 1952 Rupert Murdoch inherited the Adelaide News and Sunday Mail from his father.  The Adelaide News, as left by Sir Keith Murdoch, was an uninspiringly small newspaper.  The Murdoch inheritance was no empire.  To it, Rupert brought youthful vigour and a willingness to embrace the mass market.

Murdoch took to business life easily.  His life had been a preparation for it.  From the very start, Murdoch began stretching his wings.  As the ink dried and the presses whirled, deals were struck.  In 1960, Murdoch bought the Sydney Daily Mirror and tested the water in the television market.  Various deals came and went.  Murdoch later explained the rationale behind his apparently indiscriminate purchasing:  “We tended to take the sick newspapers, the ones that weren’t worth much, that people thought were about to fold up.” The purchases were backed by borrowing.  Murdoch quickly learned that banks were only concerned about how reliably clients repaid their loans.  Murdoch established a record of doing what he promised.  Banks rolled over and offered more.

Perhaps the boldest sign of Murdoch’s broadening ambitions was his founding of The Australian, the country’s first national newspaper.  Promising “to report the nation to Canberra and Canberra to the nation’,  The Australian started life in 1964.  What marked it apart from Murdoch’s other ventures of the time was that it was a broadsheet  with a heavier agenda (as well as a greater capacity to lose money).  And, firmly on its agenda was political power.  The Australian placed Murdoch at the center of power.  He became a national figure.  Though the newspaper lost money for years (broadsheet equals unpopular in Murdoch’s terminology) it made a mark.

By the late 1960s, Murdoch’s Australian interests were many and varied.  He began to look further afield.  The first international deal which shaped the media image of Murdoch was the purchase of the British Sunday newspaper, the News of the World in 1969.  The News of the World was downmarket and addictively populist long before Murdoch entered the newspaper business. It was not known as “The news of the screws” for nothing.

The News of the World was only the starter.  It was a Sunday newspaper.  The archaic inefficiency of Fleet Street meant that the presses remained silent during the week.  It made obvious sense to use them.

And so, Murdoch rolled out a brash new form of populist journalism with the purchase for less than £500,000 of another British newspaper,  The Sun, in 1969.  To some The Sun was — and still is — the summation of all that is wrong with Murdoch.  It is resolutely downmarket, famed for its Page Three topless models, pithy tastelessness, gung-ho nationalism and insatiable interest in the comings and goings of the stars.

The British do not have a monopoly on such things. Others followed.  Among them was the New York Post bought by Murdoch in 1976.  His relationship with the Post has been a typically complex saga.  He lost control of it in 1988 — because he bought a local TV station, WNYW — and then regained control in 1993 when the newspaper was acquired once again by News Corp.

In 1981, Murdoch marked a remarkable new chapter in his career when he bought The Times fighting off bids from the newspaper’s editor (William Rees-Mogg) and a group of journalists, as well as from the editor of the Sunday Times, Harold Evans, and the inevitable Robert Maxwell.  The “top people’s paper” was an unlikely bedfellow for The Sun.  Indeed, with its court circulars and overbearing sense of tradition, The Times  was an unlikely bedfellow for any other newspaper.  There were predictable gasps of amazement when Murdoch, the downmarket populist, bought the bastion of English journalism.  There were various pronouncements of impending doom and elderly clergymen turned the pages with new excitement, anticipating the arrival of their very own Page Three girl.

The purchase of The Times marked another important threshold in Murdoch’s career.  It was, after all, the newspaper of the Establishment which Murdoch expressed his distaste for.  Then Murdoch found himself waging war on behalf of the Establishment.

Murdoch’s newspapers in the UK were profitable.  But, with growing interests elsewhere, he was keen to maximize their profit potential.  Cash cows have to be milked.  Blocking his path were the undoubtedly outdated processes and unions of Fleet Street.  Demarcations and closed shops meant that the unions had a stranglehold on how and where newspapers were produced.  Proprietors had gone along with these arrangements for decades.  (It should not be forgotten that they, too, were culpable for the resulting inefficiencies and extravagances.)  Murdoch drove a bulldozer through them.

In Wapping, in the East of London, he built a new printing plant which didn’t need union labor.  Computers were installed which meant that editorial content could be transferred directly to the page.  On January 25th 1986 four million newspapers were produced at Wapping.  This precipitated war.

Over the following months, Wapping became a battlefield.  Thousands of pickets, from the print unions and others, attempted to bring printing at the plant to an end.  The protests were increasingly violent and raged throughout most of 1996.  The end result was complete victory for Murdoch.  The printers were paid off with £60 million and disappeared into history.  Murdoch was left with a massively more efficient operation and substantially reduced costs.  Valuations of News Corp soared from $300 million to $1 billion.

Murdoch’s confrontation with the unions was a defining moment in his career, the history of the unions and of Britain in the 1980s.  It was also the defining moment in the public’s perception of Murdoch.  He was shown to be decisive and ruthless, someone who got what they wanted.  He was clearly not only a powerful man but someone who was intent on using his power to create a business empire.

There is a feeling of opportunism about Murdoch’s career. There is nothing wrong with that. Indeed, you could argue that he has remained close to his newspaper roots.  But what is truly distinctive is the strategic energy he brought.  Never standing still is a useful strategy in business and the boxing ring. During the 1980s, Murdoch created his empire.  Acquisition followed acquisition.  His aspirations appeared ever bolder.  In 1985 he acquired Fox Studios; seven Metromedia TV stations followed in 1986; and, in 1988, he paid Walter Annenberg $3.2 billion for TV Guide.

The spending flurry was impressive but it was built on a mountain of debt. The beginning of the 1990s marked a watershed.  News Corp’s fabulous debts nearly brought it to its knees.  Only a last minute deal at the beginning of 1991 reportedly saved Murdoch’s empire from ignominious collapse.

Undaunted, Murdoch has refused to stand still. As strategies go, it is among the most difficult to emulate or compete against.

This was originally published in What we mean when we talk about strategy by Stuart Crainer and Des Dearlove (Infinite Ideas, 2016).

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