EVERYTHING NEW UNDER THE SON? 2008 PREVIEW: WITH JAMES MURDOCH

0 Comments | Sunday Herald, The, Jan 6, 2008 | by Steven Vass, Deputy Business Editor

AS the dust settles on News Corporation's Dow Jones takeover, 2008 will be the year we see what James Murdoch is really made of. The son of Rupert and heir apparent to his father's empire silenced his critics during his four years at BSkyB, but will be even more stiffly tested in his new role running the UK newspaper business along with News Corp's European and Asian assets.

It means that for the first time since Rupert Murdoch bought first The Sun and News of the World in the 1960s and then Times Newspapers in 1981, he will have a non-newspaper man at the helm in London.

Much has been written about Murdoch senior's seeming abandonment of the UK by withdrawing key British lieutenants Les Hinton and Robert Thomson to sort out the Wall Street Journal in New York following the Dow Jones deal.

But no one who has watched the way James Murdoch has pulled off one of the transformation stories of the decade at Sky, moving it from satellite broadcaster to a total communications company, would seriously believe he will be there just to keep the seat warm.

The move applies a new pair of eyes to a problem that has bedevilled even the Dirty Digger: namely how to make newspapers viable businesses for the future in the face of endlessly falling circulation and ad revenues. Executives are already said to be quaking at the pace of change and nothing appears to be off the table. If anyone can invent a new paradigm for guaranteeing the future of the industry, we might just see the first glimmers coming out of Canary Wharf in the months ahead.

In Scottish terms it will be interesting to see what young Murdoch makes of the 20p Sun price war that has helped keep the red- top's UK sales above three million. It certainly seems a long way from Sky's premium pricing ways, or so the Daily Record will be hoping.

Ifnothing else, it might offer a distraction from the Scottish government's plans to introduce a jobs portal in the late spring, which poses a threat to the advertising businesses of every newspaper in the country.

Elsewhere in Scottish newspapers, the other major focus will be the digital future. The Herald papers are shortly to announce a new combined portal for their titles in a step towards a more integrated operation with an emphasis on breaking news, and The Scotsman's recent website revamp and appointment of a head of content underlined the digital seriousness in Edinburgh too. Ditto the Daily Record, whose website has also been relaunched ahead of a digital editor being appointed and staff being given video training.

In television, it is partly a measure of the success of James Murdoch's tenure that BSkyB finds itself in regulatory knots. It faces an Ofcom investigation into its dominance in the pay-TV market and will learn the fate of its 17.9-per cent stake in ITV when trade secretary John Hutton decides later this month whether to follow the Competition Commission's advice and insist it be sold down to no more than 7.5-per cent.

The word is that Hutton, acting of course for Gordon Brown, will risk offending the Murdochs and follow the recommendation rather than causing a constitutional crisis about the closeness of the government to a media baron.

But with Sky's stake worth GBP365 million less than the GBP940m it paid in November 2006, the big question will be how and when it will have to sell. A protracted legal dispute is foreseeable.

Speaking of ITV, this is the year in which executive chairman Michael Grade will have to bring home the bacon. Last year, ITV1 reversed years of woes to outperform its rivals in terms of change in audience share, but this was partly down to Channel 4's implosion and came amid the embarrassment of the television trust crisis and Grade's attack on Scottish broadcasting.

A major overhaul of the main channel starts in just a couple of weeks with the return of the News at Ten, followed by heavy spending on weekend entertainment and big new shows such as the British Law And Order deal announced last week.

This will in theory be underpinned by the advertising boom promised by the Beijing Olympics and Euro 2008, but there are no home nations in the football tournament and the wobbly economy is unlikely to encourage anyone to spend money.

We can also expect ITV to buy more independent producers, following the deal to buy London's 12 Yard near the end of last year. With more consolidation almost guaranteed within the indie sector, too, one wonders if other broadcasters might even catch this acquisition bug themselves.

STV-owner SMG appears to be an early candidate, having finally sorted out its debt problem. Chief executive Rob Woodward, another who will have to prove himself after almost a year at the helm, has said he wants more TV production muscle, particularly now that Alan Clements will not be joining until December unless he wins his appeal in the case against RDF.

Success will also depend on big bucks Taggart surviving for another year in the face of Grade's heavily rumoured dislike of the detective show.