Media giants licking their wounds

Media magnate Rupert Murdoch, pictured with his wife Wendi, is restructuring his businesses after the hacking scandal. Photo / AP

Murdoch is back on the front foot but fellow titans the BBC and Facebook yet to recover from own goals.

While 2012 began with speculation that Rupert Murdoch would be forced by the hacking scandal to abandon his British newspapers, 2013 begins with him planning to launch one of the world's biggest publishing companies.

Despite the past 18 months, the 81-year-old media magnate is back on the front foot with the eyes of his rivals upon him. "New News Corp", as insiders are calling it, will be a standalone operation that hives off the company's newspaper, book and education assets from its film and entertainment business, which are to be known as Fox Group.

Murdoch's hopes for the new venture will be that it draws the line in the sand that finally enables News Corp to move on from its British newspapers' behaviour that has been so hurtful to the company's reputation and costly to its bottom line. News Corp released figures last month saying that, if a separate publishing division had existed this year, it would have made a loss of US$2.08 billion ($2.5 billion), due to restructuring and the fallout from the hacking scandal.

But this does not mean the new business, which will incorporate the Wall Street Journal, the Times, the Australian, Dow Jones and HarperCollins, as well as tabloids such as the Sun and the New York Post, will be cash-starved when it launches early this year.

News Corp is vastly wealthy and delivered shareholders double-digit growth last year. It made revenues of US$33 billion, helped by the success of hit TV shows such as Modern Family and Twentieth Century Fox films such as Rise of the Planet of the Apes. When it announced a separate publishing division in June, it pointedly stated it would be "one of the best capitalised in the industry" while other publishing groups are struggling to stay afloat.

Releasing News Corp's annual report in September, Murdoch said: "I know it is fashionable these days to dismiss publishing, especially newspapers. Elites in particular look down on the popular press, but within the UK, the Sun has 12 times the circulation of the Guardian and 27 times that of the Financial Times." Rather than sell his British newspapers in 2012, he launched a Sunday edition of the Sun to replace the News of the World or at least recover 2 million of its weekly sales.

Keen to appear the modern media magnate, Murdoch emphasises the digital qualities of his publishing assets. But if Murdoch is to persuade British university graduates that News Corp is where the future media action is, rather than the fatally wounded Jurassic predator that opponents like to describe, he still has a number of obstacles to overcome.

The Times goes into the new era with its newsroom seething at the treatment of popular editor James Harding, forced out by News Corp bosses in December. And for all his Fox-generated profits and bravado, Rupert Murdoch's credibility as a publishing soothsayer has taken a fresh knock with the demise of his tablet-based newspaper the Daily, which published for the last time on December 15.

Key News Corp shareholder Donald Yacktman has described the publishing division as "less than stellar" and warned he will sell his stock if it's valued at more than US$6.

Then there is the small matter of the criminal trials following the investigations into alleged phone hacking and payments to public officials. When they are out of the way, the feature film on phone-hacking can finally be completed and that's one movie that will not be generating revenues for Twentieth Century Fox.

Another organisation looking for a fresh start in 2013 is the BBC, where Tony Hall's arrival as the next director-general in March cannot come quickly enough. Last year was supposed to be the one when the BBC, settled under its long-standing director-general Mark Thompson, quietly tackled policy issues over local television and the Communications Bill before sitting back to watch its technological investments bear fruit in the shape of ground-breaking images from the diamond jubilee and the London Olympics. Instead, in spite of a stunning games and universal accolades for its coverage, the BBC found itself ending a historic year with its reputation horribly tarnished.

The disappointing broadcast of the Queen's anniversary on the throne was partly a consequence of appalling weather. But the Jimmy Savile fiasco caused the downfall of George Entwistle, just 54 days after he had replaced the retiring Thompson.

Following Nick Pollard's report into the failings of Newsnight's coverage of Savile, the BBC's leaders are desperate to be allowed to move on. But it's far too soon. The broadcaster still awaits publication of Dame Janet Smith's review of how the culture and practices of the BBC allowed Savile to operate as a paedophile. And more BBC employees may well find themselves arrested as part of Scotland Yard's Savile-related investigation.

Facebook is another media brand that scored a spectacular own goal in 2012. At the start of the year, the social network's initial public offering was the most anticipated in internet history, only for it to spectacularly misfire in May. Technical glitches and hype saw the share price fall and the underwriters for the IPO fined millions for selectively disclosing information.

True, Facebook, which had 500 million active users in 2010, raced to the 1 billion mark in October. But Mark Zuckerberg and his senior team have repeatedly offended users with its attempts to make money; attracting controversy by changing privacy policies, using facial recognition tools and acquiring Instagram. Just like the BBC, Facebook has suffered damage that it never saw coming and, with trust diminished, this year may be no easier.