Why News Corp really pulled the plug on Project Alesia

News Corporation has been
forced to abandon plans for its eagerly anticipated digital news platform, part
of the company’s so called ‘Project Alesia’ initiative, citing runaway costs.

As we revealed this morning, bean-counters at Rupert Murdoch’s media conglomerate
have decided to pull the plug on the year-long activity when it was
expected to be finalised.

The decision is said to be
absolute: this is not a delay, or grand standing or being placed on hold; this
an entire, dedicated News Corp UK
operation being dismantled just days before a product was due to go to market.

So what’s going on at
the media conglomerate?

£20m but still no cigar?

The unofficial line from News Corp is that after some 12 months of development and at an
estimated cost of £20 million, those with control of the purse-strings decided
the stakes for the news aggregation service are just too high, and it’s simply
too big a gamble to take.

Can this really be true?
Can the project’s failure be attributed to a last minute (after 12 months of development) realisation about the full costs involved? Anyone who knows
anything about News Corp’s approach to its finances would be surprised at such
an oversight.

Apparently, more than 100 people hived away in a Grays Inn Road office for the best part
of a year, were only told of their fate on Friday (15 October). Those who were
permanent staff are now in consultation, the more temporary specialists working
on contracts (approx 80 workers), have been unceremoniously disbanded.

The UK
project promised to make content from News Corp’s core print titles available
across all digital platforms, including the iPad and Google’s Android operating
system.It formed part of a bigger US drive, led by News Corp’s chief
digital officer, Jonathan Miller.

Separate commercial leads were being developed and pursued in the US and UK, but both operations are now
said to have been moth-balled. News of the digital failure is just the latest
twist in what is already a very tangled and fascinating affair.

Where next for News Corp?

As things stand, News Corp
is believed to have a very real, saleable asset that could yet attract VC
backing or other joint venture possibilities.

Apparently, protracted
negotiations have already been held with most major UK magazine and newspaper
publishers, with one influential source resolutely confident that “all major
titles would have come on board within six months of launch, with the exception
of The Guardian”. (It’s worth noting that GNM’s Tim Brooks was the first
newspaper leader to go on record and warn against a united News Corp/BSkyB
when
I interviewed him in July.)

Sources close to WPP’s media
buying powerhouse GroupM, who had been exclusively tasked to find launch
advertisers for the new platform, express reservations about how many
publishers were locked-in.

“Every press director I’ve
talked to outside of NI have denied being involved in the project, so it was
always very unclear who the amalgamation of publishers would be,” said one.

“I only ever gleaned NatMag
were keen to be involved, apart from that it was pure speculation,” said
another.

The project nonetheless definitely attracted interest from clients, but
a list of known publishing partners would have provided a welcome boost.

Another, and I believe more
pertinent, development to add to this insight, is the fact that, since last
week, many in the British media have joined forces against Murdoch’s attempts to
takeover BSkyB
in an open letter to business secretary Vince Cable.

Fearful of the combined
control of a fully-aligned News Corp/Sky offering, Murdoch’s digital crusaders have
performed a small miracle and united The Guardian and Daily Mirror with The
Telegraph and the Daily Mail. This is no mean feat, just ask the NPA.

The would-be multimedia
empire still waiting for regulatory approval includes The Sun, News of the
World, The Times, Sunday Times, Sky and book publisher HarperCollins, and has the
rival groups highlighting “serious and far reaching consequences for media
plurality”.

The petition’s united front at such a delicate time in proceedings has led to an unprecedented
backlash from Murdoch’s stable that has spilled out into Sky news reports, a leader column in The Times
and comment piece in The Sun.

Hackles have been well and
truly raised by the very publishers News Corp was hoping to enlist in the new
project. Is it possible to get into bed with the same people who rail against
you?

News Corp sources are adamant the
decision not to take the product to market is purely related to concerns over
running costs, estimated at around $200m over the next few years. But with the
initial outlay for technical expertise and development already paid, would News
Corp beancounters really pull the plug now?

Realistic economies of scale?

The biggest single
change as far as News Corp’s finances are concerned since the project began 12
months ago, has been the company’s move to take full control of BSkyB, at a
cost more than £7.8bn. That sort of money is guaranteed to eat into anyone’s
cash reserves.

The deal on the table would
have seen individual publishers paid every time a subscriber came on board,
meaning until critical mass was reached costs would be high. The plan was to
charge £9.99 per month for unlimited access to the bundled content. Projected
forecasts were to achieve one million subscribers by the end of year one.

News Corp was funding the
physical platform, described by some as being “light-years” ahead of anything
else currently available, but sources strongly deny there was ever any interest
in asserting any kind of editorial control over third-party content.

By way of comparison, News International has just launched a joint offer for
access to the Times and Sunday Times sites, at a cost of just £1 for 30 days.
But as yet, there is still no official statement on the impact these paywalls
are having on the business.

The autopsy for the ‘News Corp platform that never was’ has only just begun,
but I believe that when faced with an increasingly hostile circle of potential publishing
partners, uncertain advertising support, and a long, expensive subscription
drive; securing the proven assets of BSkyB became a far more important, and attractive, priority.

But where does the UK’s publishing
industry go from here?

  • http://

    $200m? That was just the lunch budget.

  • Dave Trott

    (Jim Kelly, now CEO of Dentsu, just sent me an email, I thought I’d share it:)
    Hi Dave ,
    Absolutely true story – I even use it in a speech I do to account directors .
    Thanks for reminding me in a such a nice way .
    Mind you I  was the poor bugger  who had to go to Tokyo to sell it to the Japanese.
    Good training for today’s job though ……..
    Best
    Jim

  • martin sadofski

    I remember being in a room with John lennon and Albert Einstein. We were chatting to George best and he said to me he’d just been drinking with Michael Caine… never name drop!  Al Pacino gave me that advice.

  • Kevin Gordon

    Hi Dave, the Dalek’s voices, those daft barbecue cover heads, and ridiculous laughter make the characters in the Smash ads come to life. It’s an absolute classic, so watchable again and again and again. What makes you remember the brand is it flowed beautifully tucked into the narrative… 
    “and they smash them all to bits”. I guess the simple universal truth is that making mash out of potatoes seems daft, and making Smash out of mash seems obvious once it’s been done, but how many ads are truly this memorable after 40 years? 

  • michael hills

    Frank Lowe also once said that he thought the line  “I’m smitten with my Vauxhall” would become a classic.

  • Conor O’Sullivan

    I think that one of the most important attributes a creative should have is the ability to be a performer. Or at least to be thick-skinned enough to be prepared to make a complete fool of yourself as you literally act out the TVC or radio script in front of the client.

  • Dave Trott

    I agree Conor, without it they’re missing a dimension.
    Creatives just assume clients can see what’s in their head.

  • Dave Trott

     For George Parker,
    Like you I’ve been having problems with the makeover.
    I tried to comment on your blog but no luck.
    Hopefully it’ll all get sorted eventually.
    The social media is a bit anti-social at present.

  • George Parker

    Dave…
    No comments and and my last couple of posts have disappeared. I also have no idea how to make new posts. emails to Gordon etc are unanswered. He’s probably hiding out in The French  ’til the sh*t settles.
    Cheers/George

  • Rob Mortimer

    I was watching the Looney Tunes Golden Collection at the weekend, and there was an extra which showed film footage of Tex Avery in the early 40’s physically acting out the movements of one of the characters to demonstrate exactly how it should look.

    The principle is very similar. He was working with the best animators in the world at that time, but he still took a long time to make sure they saw it how he did.

  • Kevin Gordon

    There was a great documentary about the life of Eddie izzard last night on BBC 4.
    Did anyone see it?

  • Dave Trott

    Kevin,
    I had to watch the whole thing, it was addictive.
    I love the way he ‘runs towards what frightens him’.
    It’s still resonating in my head.

  • Kevin Gordon

    Yes Dave,
    I think his mother’s death at an early age plays a big part in his motivation for success.
    That resonates strongly with my own abandonment through adoption at an early age.
    You grow up ahead of time, and quickly realise you are responsible for your own success.
    If life holds no challenge it becomes meaningless.
    A friend of mine is very successful. His kids have led a sheltered life.
    He can’t even get one of them out of bed to go to work in the morning.