This week I am doing something different in Entrepreneur Watch, and looking at five rich list members who entrepreneurs should keep a close eye on over the next few years. I’ve chosen them because their personal empire is at an interesting point and their industry is undergoing structural change – how these entrepreneurs react will set an important example for other business owners.
Lachlan Murdoch did something pretty impressive recently – he received a substantial dividend from a traditional media company.
According to reports, Murdoch’s 50% stake in radio network DMG Radio Australia earned him a dividend of about $15 million in the six months to the end of March.
The news will be a boost to Murdoch, who bought into DMG Radio Australia in November 2009 for a reported $110 million and has played a reasonably hands-on role in turning the company around.
But it’s not just a boost to the return on his investment in DMG – it’s a fillip for his entire business.
When Murdoch’s investment in DMG Radio Australia is put alongside his stakes in Ten Network and regional television group Prime Media, it’s clear that Murdoch is trying to prove that you can still turn a buck from traditional media.
But can he pull it off?
Murdoch’s approach has been not unlike that of a traditional “value” investor.
He’s tried to spot unloved and underperforming assets, buy into them at a reasonable price (rather than on the cheap) and, in the case of DMG and Ten, take a role in turning them around.
His strategy appears to be particularly driven by content.
At DMG, one of his first decisions was to replace the company’s Vega format with a new classic rock format.
At Ten, he’s been busy changing the focus of the One HD channel, focusing less on sports and more on male-orientated reality television shows and movies.
In some ways, that’s the fun stuff. Now he’s got to show that he can turn the commercial side of these businesses around in a rather constrained advertising environment.
That’s what will be particularly interesting about Murdoch’s next moves. Will he seek to change the business models of either group in some way? Are there new pricing models or advertising models that could be used in the site?
Most importantly, what can Murdoch do differently to other media players? If his strategy is simply to improve the content at DMG and Ten, then making anything other than a steady return will be hard.
Rupert Murdoch’s time is coming to an end. Can Lachlan lead the media into a new era?
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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