THE DISTILLERY: Murdoch's double shot

Scribes consider News Corporation's post-demerger potential, with one saying the 'content is king' narrative still reigns.

News Corp billionaire Rupert Murdoch isn’t giving it all away in regards to the split of his legacy print empire from his entertainment assets. Two commentators offer their take this morning. One isn’t a News Limited man and one is.

Also this morning, yesterday’s worrying GDP numbers on the back of the Reserve Bank of Australia’s decision to sit are put into their proper context.

But first, The Australian Financial Review’s Matthew Stevens – formerly of The Australian – delivers a piece on Murdoch’s split that has a few jabs at the fact that a lot of the marketing around the newspaper division is just that – marketing.

“All we really know on that front is that New News reckons it has more opportunity than it can digest, that print will not be a destination for any acquisitive ambition and that $500 million of its birthright can be invested in supporting the share price post-demerger, courtesy of the pre-split approval for a defensive buyback. But let’s not get too wound up about what wasn’t and rather consider the important insights that were offered by Murdoch and his Melbourne-born chief executive Robert Thomson. To a significant degree, the underlying narrative here has not changed that much since that magic moment maybe half a decade ago when Murdoch stepped back from the brink of transforming News into some sort of half-caste technology provider and recovered his belief in the power of content. The message then was, ‘what have we been thinking, content is still king’.”

The Herald Sun’s Terry McCrann, a long-time stalwart of the Murdoch empire, claims that there is actually a degree of certainty to come out of the News Corp briefings.

“The operational business case for splitting Rupert Murdoch's 'old' News Corporation into its two component parts is compelling and should be very clear. Perhaps not so obvious is that exactly the same applies to the investment case for the split. One and one adds up to more than two on both fronts. The split should create two better businesses. It should also create two better investments. Especially and in particular for Australian investors. This should have been made crystal clear in the investor presentation day yesterday.”

News Corp is the parent company of News Ltd, owner of Business Spectator and Eureka Report.

Meanwhile, yesterday’s soft GDP numbers from the Australian Bureau of Statistics underlined some of the commentary on the back of the Reserve Bank of Australia’s monetary policy statement the previous day. Put simply, there are more rate cuts to come.

Fairfax’s Tim Colebatch has a great yarn about the relationship between these two institutions that more or less wraps it up.

“Some years back, the Reserve Bank asked the Bureau of Statistics to stop releasing its quarterly GDP figures the day after the Reserve's board meets. Too often, the GDP figures implied that the Reserve had made the wrong decision on interest rates. It resented it. The Reserve suggested the bureau release the GDP figures a week later. The bureau was incredulous. Its job, it said, was to give the figures to the Australian public as soon as it could. If the Reserve finds them embarrassing, why can't its board meet a week later, when its deliberations would benefit from having the latest figures? Indeed. Short of hubris, there is no reason why the Reserve has to make interest rate decisions on the first Tuesday of the month.”

Just perfect!

Meanwhile, The Herald Sun’s McCrann has a second piece this morning that puts the GDP data, however embarrassing to the Reserve Bank, into its proper context.

“The single most important thing to understand about yesterday's softish growth numbers for the Australian economy is that they came before the Reserve Bank's latest interest rate cuts and the fall in the Aussie dollar. That is to say, they tell us about the state of play in Australia before all that extra stimulus flowed into the economy. And not just the latest rate cut, last month. But the last two, in October and December last year, as well. The GDP data was for the March quarter.”

Again, just perfect!

And while we’re talking GDP, The Australian Financial Review’s economics editor Alan Mitchell makes a critical point about what the country’s economic growth outlook means for the federal budget.

“While the Treasurer naturally prefers to highlight the resilience of the Australian economy, economists are focusing more on its sub-par growth and the possible need for more stimulus from the Reserve Bank. They also are concerned about the possible impact on the budget’s revenue estimates of the economy’s almost certain failure to meet the budget’s forecast of 3.25 per cent nominal growth for the current financial year. To meet the forecast growth, Deutsche Bank’s Adam Boyton and Phil Odonaghoe point out, nominal gross domestic product would have to grow by more than four per cent in the June quarter.”

Meanwhile, The Australian’s economics editor David Uren says the federal government burdened itself with 40 inquiries – we’re talking Garnaut, Henry, Bennett and Gonski to name a few – that created an enormous policy response burden. The Coalition risks painting itself into the same corner.

The Australian’s John Durie explains how our high cost of living could force Simplot Australia to shutting two of its plants.

Meanwhile, Fairfax’s Michael Pascoe laments the fact that international clothing giant Zara is charging Australians more than it does consumers in other markets. But Pascoe also points out those domestic retailers are so weak that they allow Zara to get away with this rubbish.

Plus, we can be thankful that Zara is paying its tax.

And finally, The Australian’s Asia-Pacific editor Rowan Callick says expectations are low for the imminent meeting between US President Barack Obama and Chinese President Xi Jinping.

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