Last week I called up Rupert Murdoch, the CEO of NewsCorp (NWS)and asked him a question during his quarterly conference call.

"I know that you don’t break out revenue numbers for Fox News beyond the top line, but with 81 advertisers leaving the Glenn Beck show following the Color of Change action, the show now seems limited to in house ads and gold ads. Do you have a time frame for how long Fox will subsidize the show until it to starts to generate revenue in line with its ratings? "

Here was Rupert Murdoch’s response:

"It’s not subsidizing the show at all. And it’s giving a terrific kick off to the whole evening schedule. It has plenty of advertising, and those advertisers you talk about, I don’t think there is anything like that number, but if there were they are on other shows."

Here is the audio of my question and his answer.

I was using one of my normal sounding names instead of Spocko because I didn’t want Fox Security to be dispatched to my home like Bill O’Reilly threatened to do when my friend Mike Stark brought up an uncomfortable topic.

Murdoch’s response to the question got picked up by:

I appreciate the coverage of my question but what I find interesting is just how hard it is for the media to actually cover the big media. And, when faced with evidence to the contrary, the CEO can just say, "No, your hard evidence is wrong." and go about his business. We know that Fox has no obligation to tell the truth on their news programs, but I thought that they were supposed to acknowledge reality during the financial sessions. I seem to remember there were some regulations passed after Enron that the CEOs were supposed to know what was going on financially inside their companies.

Also, it would be nice if someone in the trade press or financial press would acknowledge when the people have an impact on big media.

The people at Color of Change put together an amazing advertiser alert program. They convinced 81 advertisers that Beck’s race baiting is something they did not want to be associated with.

Another group, stopbeck.com, had a twitter campaign that convinced more advertisers to leave.

The standard line is that public corporations are supposed to "maximize shareholder value". When they don’t, their shareholders are supposed to call them on it. The NewsCorp shareholders should want to know why Fox isn’t making MORE money on Glenn Beck’s show. That was the essence of my question.

By asking this question I wanted NewsCorp to acknowledge or deny they were subsidizing Beck in the face of the evidence. (Of course if I was sharper I would have had my follow up question out before I was cut off. "Well, the Color of Change people have proof of all the advertisers that left. Do you have proof you aren’t subsidizing him?")

Here’s the thing, huge media corporations are "too big to tell". They don’t have to tell anyone what’s going under the top line results. This can hide a multitude of financial shenanigans.

If Fox wasn’t part of a massive media entity like NewsCorp they would have had to answer questions like:

  • What steps has Fox News taken to recoup the revenue lost from 81 advertisers leaving the Glenn Beck show?
  • If the Beck show has high ratings but low revenue how long does the network plan to keep losing money on the show? Is there a path to profitability?
  • If the "high ratings" of the show is supposed to result in greater revenue for other parts of the company, is there any documented figures to make this connection? Third party audited figures? (The myth of Fox News ratings bump)
  • Which departmental budgets are subsidizing the Glenn Beck salaries and production costs?

And a few further questions I could have asked but they wouldn’t have to tell:

  • If internal Fox budgets are not subsidizing the Glenn Beck show, where is the funding coming from?
  • If Fox News is not subsidizing the Glenn Beck show and Chairman Murdoch is not personally funding it, then funding is coming out of a NewsCorp budget. What form does the company expect the return on investment to take? Better relationships with the current government? A better Federal regulatory environment?
  • The Wall Street Journal is still an advertiser on the Glenn Beck show, does this mean that the Wall Street Journal has been told to subsidize the Beck show by NewsCorp management?

We’ve been talking a lot about the ill effects of "too big to fail" in the financial industry. Huge media corporations also can have ill effects on the country when they are "too big to tell" and subsidizing people like Glenn Beck is an example of the sickness big media delivers.

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Thanks to Josh Stearns and the folks at Free Press, Eric Boehlert of Media Matters, Gabriel Rey-Goodlatte from Color of Change, StopBeck.com, Mike Stark of Stark Reports and Suzanne and all the folks at LLN here on FDL.
LLAP,
Spocko of Spocko’s Brain