New direction for media magnate Murdoch
News Corp., which recently increased its stake to 35 percent in the ailing broadcaster TV Puls, will try to turn the network around with a new programming lineup in September, according to the Dziennik newspaper.
The move indicates that the New York-based conglomerate persuaded the majority partners, the Franciscan Brothers, to let it try to do what the previous management has been unable to.
Persuasion is News Corp.?s only leverage with the Franciscans because as a foreign-based company it can never own more than a 49 percent minority interest in TV Puls ? unless Poland changes its media laws.
News Corp. said the new TV Puls lineup will include a mix of news and entertainment. That?s a formula that many networks around the world use ? but News Corp. has had a knack for making both its news and entertainment programs the best-watched in its markets.
TV Puls, which started broadcasting in March 2001, has been fighting for survival.
Its management has been unable to come up with a clear concept for the network, put together a compelling programming lineup or craft an effective development strategy.
In fact, Polish media observers wondered if Rupert Murdoch, the head of News Corp. and one of the richest and shrewdest media tycoons in the world, had finally bitten off more than he could chew by investing in Poland.
Many have scoffed at Murdoch investments before, however ? and been proven wrong.
The Australian-born American has cobbled together one of the largest media conglomerates in the world by making bold ? even risky ? investments, then staying with them when they initially faltered.
News Corp.?s holdings include the U.S. Fox Network with its Fox News Channel, Hollywood?s Fox movie studio, the trans-Europe TV network BskyB, the respected Times of London newspaper and the wildly popular Internet social-networking portal MySpace.com.
News Corp. bought 25 percent of the niche network TV Puls in June 2006. Murdoch has used the strategy of getting into a market with a niche media purchase, then turning the operation into a powerhouse that bowls over competitors. For example, he has turned the Fox News Channel into the highest-rated 24-hour news channel in the U.S., eclipsing CNN.
So he may have been biding his time with TV Puls, waiting for the Franciscan Brothers to let him take over the network?s reins.
In April of this year News Corp. increased its stake in TV Puls to 35 percent.
Murdoch said during a teleconference with financial analysts last month that TV Puls was one of News Corp.?s most exciting new investments because of its nationwide coverage in a country that ?has the biggest potential of growth in Europe presently.?
?At the moment it does not have any income,? has very low ratings and ?to build it may cost us a bit,? Murdoch said. But he has turned similar investments into earnings and ratings leaders.
Murdoch said during the conference call that he has put $50 mln into TV Puls so far.
Although that is a drop in the bucket for Murdoch, it has been a huge infusion of cash for TV Puls.
Its financial backers, including the Prokom company, put only 120 mln zloty into its development before News Corp. arrived ? about $42.5 mln.
TV Puls had a less than 1 percent share of Poland?s national television audience in the first five months of this year, the same as it had during the same period last year. The share leader was public television network Telewizja Polska SA, with 25 percent of the national audience.
Murdoch wasn?t worried about the low earnings and ratings when he bought into TV Puls, said Jakub Bierzynski, head of the Omnicom Media Group media house. He bought it for its potential, Bierzynski said in Rzeczpospolita newspaper.
If a broadcast operation is run well, the license is like a license to print money. That?s especially true in Poland, which boasts a 30 to 45 percent return on investment ? the best in Europe. In other words, for every zloty spent, the return is 1.30 to 1.45 zloty.
Advertisers have been behind this fantastic return on investment, pouring money into Polish television in recent years.
News Corp. was eager to get into Poland after seeing its TV investments in Bulgaria and Serbia sparkle. In the last two years TV advertising in those countries has grown at a rate of 10 to 12 percent a year.
Three networks dominate Poland?s television market — public TV?s Telewizia Polska and the commercial networks Polsat and TVN.
TV Puls will have a difficult time making inroads in entertainment programming, Bierzynski predicted. A key problem will be attracting well-known faces who can command an audience.
These days most of Poland?s top TV personalities are associated either with Polsat or TV, he said.
Murdoch may start off with a lack of big-name talent. But in other countries he has quickly stolen talent by paying them much more than anyone else could.
He has no trouble doing that, given that News Corp. is one of the world?s most profitable companies.