Wizard of Oz may yet emerge as a hero

Rupert Murdoch is the wizard of Oz. The 78-year-old has spent a lifetime building the world's most powerful media group, transforming a single antipodean newspaper into an empire that transcends national boundaries.

Like his literary equivalent, his power is real, and prime ministers and presidents often seem mesmerised by its potency. But while his newspapers and television holdings give him undoubted influence, his status is magnified many times by the Murdoch myth.

He has been a figure on the world stage for so long that his reputation alone is sometimes enough to inhibit the actions of others, whether in the boardrooms or the corridors of power in London or Washington.

His views on Europe or on the free market are familiar enough to policy-makers and opinion-formers, so he sometimes finds himself in the happy position of receiving favours without even having to ask for them.

It is an arrangement which Murdoch skilfully exploits, but it depends in large part on his continued ability to keep on controlling the news and to make huge amounts of money in the process.

Last week, Murdoch came close to admitting that he may not be able to continue doing so unless he radically transforms his business and revolutionises the industry that has made him so powerful.

The 78-year-old media mogul, who controls more than 100 newspapers and dozens of TV channels around the world, has supposedly mellowed, a change that many attribute to the influence of his 40-year-old Chinese wife, Wendi Deng, with whom he has two young children.

He is sometimes spotted in open-necked shirts and chinos and briefly shared a fashionable Manhattan loft apartment with his third wife before moving back to the wealthy Upper East Side, although he is hardly likely to slip comfortably into retirement.

Murdoch is too busy lavishing attention on his latest trophy acquisition, the Wall Street Journal, which he bought in 2007, and winning plaudits for sharpening news coverage, surprising those who feared he might take the paper downmarket.

Newspapers are in Murdoch's blood. He inherited shares in a small Australian media group, News Ltd, on the death of his father, Keith, in 1952 and became its managing director after graduating from Oxford, using it as a platform to expand across the country and then into Britain and the United States.

His TV interests make more money, but it is his print portfolio that is dominating Murdoch's thoughts at present. His titles, which include the once-upmarket Times and the downmarket Sun in London, are battling falling advertising revenues, down 14 per cent year-on-year as the worst recession for a generation or more continues to bite.

They are also losing readers and advertisers to the internet and although many consumers are migrating to established newspaper sites, no one has figured out how to make money from content that is given away online. That could be about to change.

Unveiling full-year results at News Corp, the sprawling media giant he chairs, and which owns movie studios and internet site MySpace as well as papers and TV channels, Murdoch said last week that all his titles will begin charging for online content by June next year.

That represents a stunning rejection of industry orthodoxy, which holds that no one will pay for news-related content online and could prove to be one of the defining moments of Murdoch's long career.

Executives at his British papers, now run by his 36-year-old son and heir apparent, James, have been working for months on plans to place some premium content beyond the reach of punters who aren't prepared to pay.

It is unclear whether the News of the World, the Sun or Sunday Times and its daily sister title will introduce monthly or annual subscriptions, charge users a few pence per visit or come up with a new business model.

The rest of the industry is waiting to see what Murdoch does and will be quick to copy his strategy should his gamble pay off. "I believe that if we're successful, we'll be followed fast by other media," Murdoch said last week.

Media commentator Michael Wolff, who was granted unprecedented access to Murdoch for a 2008 biography, says: "What he is going to do is the thing he has always done: buck convention, offend sensibilities and not pussyfoot around. [That] has pretty much been his method of operation in the media business. By force of will and clarity of position, he defines the world."

Wolff doubts the plan will be a success and argues that Murdoch has alighted on it after watching News Corp make the biggest losses in its recent history.

"There is no one who produces more news than Rupert. Quantity is what he does. On this basis and with this approach, he is now losing his shirt."

Two of his cash cows, the Sunday Times and News of the World, can no longer make the contribution they once did to the British newspapers group. The first is loss-making and the "Screws" is making a reduced profit of around £5 million ($12.2 million).

Only the Sun, which saved Murdoch's empire from collapsing under the weight of huge debts in the early 1990s, still makes a significant sum.

The tough conditions have led Murdoch to declare that the era of free news is over.

Veteran Murdoch-watchers claim the fact he has chosen to flag up his plans for the best part of a year suggests he is uncharacteristically nervous about the step he is about to take.

He usually takes the opposition by surprise, cutting the cover price of the Times or the Sun to 10p to boost circulation or, famously, transferring the workforce of his British newspapers to new, technologically advanced London offices overnight.

Andrew Neil, a former Sunday Times editor, says: "It is a good idea. I think he's right and it would help if everybody did it." But he adds: "He knows that this will work best if all the main competitors do it."

If some of News International's content is placed behind a firewall that can be accessed only by consumers brandishing credit cards, competitors could steal a march by continuing to make similar material available free on their sites.

Even if they choose to follow News Corp's example, the BBC will continue to operate one of the world's biggest free news sites.

One of the most intriguing aspects of the Murdoch plan is that it has recast him as an industry saviour in the eyes of some critics, who previously regarded him as an enemy of the "quality journalism" he claims he is attempting to rescue.

He is still characterised as a ruthless businessman who routinely bends governments to his will in order to pursue his corporate interests and for many on the left, Murdoch is little short of evil incarnate.

Now, however, many who spent decades willing him to fail are praying he succeeds. His reputation in America, where he is reviled by liberals who resent the success of Fox News, has also been rejuvenated by his ownership of the Journal, one of the country's most respected journalistic institutions.

Martin Dunn, editor-in-chief of the New York Daily News, but previously a Murdoch executive, says: "Rupert's reputation was one of absolute dread. Everybody thought he was going to devalue the entire newspaper industry over here. There was that fear amongst journalists at the Journal. The view of most people I've talked to is that he's improved the paper and there is a grudging respect for what he's done among what I would call the literati of US journalism."

Dunn says Murdoch is one of the few newspaper proprietors who is passionate enough about print to lead an effort to save it. "He wants to protect his titles. He is realistic about the problems newspapers face, but at least he'd doing something about it and putting his money where his mouth is."

The sceptics, including Wolff, believe he will fail: "He is certainly swimming against the tide. Consumers are going to have to pay him per click. It isn't likely that you will, but Rupert has pulled off upsets before, though this one would be his most astounding."

Wolff's biography of Murdoch is called The Man Who Owns the News, but if he writes a sequel, he may have to call it The Man Who Saved the News. That is an epitaph even Murdoch's most ardent admirers could not have imagined he would ever lay claim to.

- OBSERVER

MURDOCH LOWDOWN
Born on March 11, 1931 in Melbourne, Australia. He was educated at Oxford and returned home to take charge of the family's finances in the early 1950s.

He has six children: Prudence, from his first marriage, to Patricia; three by his second wife, Anna, who he divorced in 1999; and two young children with his current wife, Wendi.

BEST OF TIMES
Acquiring Times newspapers in 1981 forced the British establishment to take him seriously and won him respect, if not admiration. From that moment, his status as a powerbroker was assured.

WORST OF TIMES
Watching his debt-laden media empire News Corp come close to collapse in the early-1990s recession after a period of expansion. He effectively saved it by borrowing against the future revenues of the Sun.

WHAT HE SAYS
"I'm a catalyst for change. You can't be an outsider and be successful over 30 years without leaving a certain amount of scar tissue around the place."

WHAT THEY SAY
"If you want to know what Rupert Murdoch really thinks, read the editorials in the Sun and the New York Post, because he is editor-in-chief of these papers."

- Former Sunday Times editor Andrew Neil