Murdoch's New Groove

Keith Rupert Murdoch may be 74 years old, but the way he sees it, he's got a young man's fingertips for what's cool. Last year the News Corp. chairman acquired MySpace.com, the wildly popular social-networking site, for $580 million. He then spent almost $1 billion to snap up two more Internet businesses for college sports and videogaming. Those sites, plus others in his media empire, now give him bragging rights as the Internet's fourth biggest purveyor of online media and networking sites in terms of page views, and sixth in unique users. And by the end of the month, he tells NEWSWEEK, he'll announce a $1 billion plan for adding broadband to DirecTV, the satellite-TV service he controls. All this, he says, will add up to "a conservative $1 billion" in his Internet revenues by 2010, not counting any more acquisitions.

For months, Murdoch has been barnstorming the United States and other countries, proselytizing about Net opportunities. He slowed down enough to share his thoughts with NEWSWEEK's Johnnie L. Roberts on subjects ranging from why he thinks Sumner Redstone is wrong to Google's controversies with the U.S. and Chinese governments. He even offers his views on dissident investor Carl Icahn's plans, expect-ed to be unveiled this week, to break up Time Warner.

ROBERTS: The age of video downloads seems to have arrived with surprising abruptness. Were you and fellow media moguls caught flat-footed?

MURDOCH: Most newspaper companies still have their heads in the sand, but other media companies are aggressive. And there are completely new start-up companies. There is a great pace of development, which is very exciting. At News Corp., we have been developing online extensions of traditional media for the last few years. What's happened now? We're seeing the spread of broadband. In the whole world today, only 190 million homes can receive broadband. That's going to go up in the next 10 to 20 years to at least 3 billion homes. We're just now at the very beginning of the shift to digital media.

Millions of videos, some from GE's NBC and Disney's ABC, are being downloaded onto iPods. Why aren't your Fox shows on it?

We're not knocked out by iPod so far. We've talked to them, to Google and others. But how many people really want to get video on a tiny screen when they already have TiVo or a similar service from their cable company or DirecTV? How many will want to pay $1.99 on Monday morning if they missed "Desperate Housewives" the night before? What's been announced so far with iPod and Disney and NBC is very small-time at the moment.