In a surprising turn of events, the Murdoch family, known for their entrenched interests in legacy media, are reportedly involved in a potential deal concerning TikTok, the Chinese-owned social media giant. This move comes amidst the Trump administration’s controversial executive order aimed at reshaping TikTok’s ownership in the United States, citing national security concerns.
The executive order, titled “Saving TikTok while protecting national security,” sets a 120-day deadline for the deal’s completion, leaving the final outcome uncertain until late January. The Murdoch family’s involvement raises questions about their strategy in navigating the rapidly evolving digital landscape, given their historical struggles with digital innovation.
The Murdochs’ Digital Ventures: A Mixed Record
The Murdochs have a history of ambitious, albeit often unsuccessful, ventures into the tech world. Their acquisition of MySpace for $580 million is a well-documented misstep, as is Rupert Murdoch’s $125 million investment in the now-defunct Theranos. More recently, Foxtel’s $200 million loss in developing the Hubbl app further highlights their challenges in adapting to new media paradigms.
Despite these setbacks, the Murdochs remain undeterred. Their potential investment in TikTok, reportedly involving Fox as one of several investors in a $14 billion buyout, signals an attempt to gain a foothold in the lucrative social media sector. However, the exact financial commitment from Fox remains unclear, with estimates suggesting a possible contribution of over $2 billion.
Understanding TikTok’s Value
TikTok’s appeal lies in its sophisticated algorithm, which has revolutionized content distribution through short-form videos. While the proposed deal would allow the US-based entity to moderate content and retrain the algorithm using American data, the core technology would remain under ByteDance’s control.
The real value of TikTok is the addictive power of its algorithm sauce that keeps users online.
This arrangement highlights the complexities of the deal, as the Murdochs and other investors would not gain full ownership of the algorithm, potentially limiting their influence over the platform’s operations.
Financial Maneuvering and Strategic Implications
The Murdochs’ involvement in the TikTok deal coincides with their recent $3.3 billion buyout of shares held by Lachlan Murdoch’s siblings in the family trust. This strategic move suggests a consolidation of power within the family, potentially facilitating further investments in digital ventures.
However, the timing of this buyout, following a protracted legal battle over the family trust, raises questions about the Murdochs’ long-term strategy. With social media usage reportedly declining by 10% since late 2022, and platforms increasingly inundated with AI-generated content, the Murdochs’ foray into TikTok may face significant challenges.
Looking Ahead: Risks and Opportunities
While the TikTok deal presents an opportunity for the Murdochs to establish a presence in the digital sphere, it also carries substantial risks. The potential for overvaluation, coupled with the volatile nature of the social media landscape, could undermine their investment.
At worst, they’ll be buying in at the top of the market, or maybe even later.
Moreover, the deal’s reliance on the Trump administration’s policies adds another layer of uncertainty. As the political landscape shifts, the Murdochs may find themselves increasingly dependent on external factors beyond their control.
In conclusion, the Murdoch family’s involvement in the TikTok deal underscores their ongoing quest to transition from traditional media to digital innovation. Whether this latest venture will succeed where previous efforts have faltered remains to be seen, but it undoubtedly marks a significant moment in their storied history.
