Why News Corp. needs to hold on to All Things D

Felix Salmon of Reuters writes why it is important for News Corp. to hang on to its All Things D tech news website run by journalists Kara Swisher and Walt Mossberg.

Salmon writes, “What’s happened here is that Swisher and Mossberg have created something with substantial value — as much as $50 million. And since the value lies with them, rather than in the ATD brand, they can walk away and find a strategic partner willing to invest an eight-figure sum in creating a new, entirely independent brand. That’s got to be attractive to them, for two reasons: firstly, they would become truly independent, and in control of their own destiny. No more begging their New York paymasters for extra investment: if they own the company, they can make all those decisions themselves. And then, of course, there’s the money: if they each own say 25% of a $50 million company, that’s a lot of paper wealth which they’re never going to accumulate working for News Corp, and which — in the way of Silicon Valley — could become worth much more still if their expansion plans work out the way they hope they will.

“Meanwhile, Rupert Murdoch stands firmly on the other side of the Great Paywall Divide, and feels as a matter of principle that all of his properties (except, perhaps, nypost.com) should charge readers for their content. He’s also human, which means that, like all other humans, he’s deeply reluctant to pay a large amount of money to buy something he already owns.

“Murdoch, by rights, should be able to retain control of ATD, complete with Swisher and Mossberg. They’re offering very little to his rivals: a minority stake, no editorial control whatsoever, and probably very little cashflow, at least for the first few years, since as a startup they’re going to want to reinvest all of their revenues back into their company. Meanwhile, News Corp has the opportunity to own ATD 100% (indeed, it already does), and can offer Swisher and Mossberg the ability to invest in the site without having to go through the hassles of rebranding and relaunching. Given the economics of control premiums, Murdoch should easily be able to promise significantly more resources than his rivals can come up with.

“But after years of writing the entrepreneurial gospel, it’s understandable that Swisher and Mossberg might want to live it for themselves. And they’re both wealthy enough to afford a few years of startup wages: Mossberg has been one of Murdoch’s highest-paid print journalists for years, while Swisher, who’s well paid herself, is also married to long-time Google executive Megan Smith.”

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