News Corporation CEO Robert Thomson (NWSA) sits down with Yahoo Finance Executive Editor Brian Sozzi at the Goldman Sachs Communacopia & Technology Conference as he unpacks the impact of AI on the media industry. Thomson states that AI will be "epochal" for news going on to warn that the industry could face a "tsunami potentially of job losses" due to the tech.
Thomson says that with AI the danger is "rubbish in, rubbish out, and, in this case, rubbish all about" emphasizing his point that there is no management of content with AI. "Instead of elevating and enhancing, what you might find is that you have this ever-shrinking cycle of sanity surrounded by a reservoir of rubbish," Thomson says. Thomson goes on to say that AI can't replace editorial roles and "great writing," but it will have an impact on roles that do things that are "replicative and iterative."
Thomson also weighs in on his outlets will be covering the 2024 election cycle and the potential boost in ad spending that comes with it.
Click here for more of Yahoo Finance's coverage from the Goldman Sachs Communacopia + Technology Conference.
BRIAN SOZZI: Talk about the business of news and how AI may impact that field, which is my field of choice, News Corp CEO Robert Thomson. Thanks for joining us. I know you don't do a lot of these, and long time follower of your career. Thank you for doing this.
ROBERT THOMSON: Pleasure, Brian.
BRIAN SOZZI: Talk to us. I think you had some really amazing comments on your last earnings call. You said this, quote, it's an important moment in the history of news and knowledge. Take us through how AI will impact a business like the news industry.
ROBERT THOMSON: Brian, it's fundamental. For editorial, it's epochal. And that's an overused word, but it's absolutely relevant now. And you can ask, well, what is AI? Is AI articulate insights? Is AI amusing incoherence? Is it abject ignorance? Is AI initiating an affidavit, affidavit initiated?
All of those things are in play at the moment. What will AI become? What will the impact on US be? And therefore, what will the impact on society be? And that's why there needs to be much more debate about the role of AI in companies, but there certainly needs to be a lot of debate about AI in journalism because if you look at the impact of what, as Lesley called, big digital over the last decade and a half.
From 2008 to 2020, 57% of newsroom jobs in the United States have been lost. That's from 71,000 to 31,000. We're facing another wave, in this case, a tsunami potentially of job losses because of the impact of AI. And these are not just jobs lost, it's insights lost. And so it's important that all media companies understand the impact, but also, it's incumbent on the big AI players to understand their impact.
BRIAN SOZZI: I want to get to the big AI players in a second. But what is the impact you mentioned to society? Theoretically, because of AI, we could see an impact in fake news stories. I look at it from the business world. Maybe we're seeing machines write earnings stories. The numbers go out there, and they're wrong, and the stock price goes up or down. What's the long term ramifications of this?
ROBERT THOMSON: People have to understand that AI is essentially retrospective. It's about permutations of pre-existing content. And the danger in, it's rubbish in, rubbish out, and in this case, rubbish all about. Because it's distributing exponentially potentially damaging content. And so instead of elevating and enhancing, what you might find is that you have this ever shrinking cycle of sanity surrounded by a reservoir of rubbish. That instead of the inside that AI can potentially bring, it will evolve into essentially a maggot-ridden mind mold.
BRIAN SOZZI: Does AI, will it play a role in your various publications, like the Wall Street Journal and MarketWatch? Do you talk to your tech teams and say, hey, we need to develop this to move even faster to feed these tech beasts?
ROBERT THOMSON: Well, it'll have an impact in most departments and most companies. Certainly in editorial, it's not going to replace great writing, and I think there's some misunderstanding.
BRIAN SOZZI: I feel safe. Thank you.
ROBERT THOMSON: It's not going to replace the great business journalists. You're definitely safe, Brian. But it will replace certain simple functions, in back office, in code writing, and it's clearly going to have a profound impact. Anything that is replicative and iterative, it will have an impact.
But in newsrooms per se, understanding how can you use it as a tool is important. But it's also having enough understanding of just the essence of it. And essentially, it's what you might call a tech triptych in the way that content will be used. The big AI engines are going to scrape content to feed and update the engine. They're going to surface individual stories, and they're going to extract the editorial essence.
And in each of those three areas, it's incumbent on the big players to reward those who created that content, or else, they're actually undermining the act of creation.
BRIAN SOZZI: You have some of the most influential publications in the world. The Wall Street Journal, Barron's, MarketWatch, New York Post. I'm sure I'm leaving out a couple right now. I promise you I read the Tech AI. I promise you. But you take that IP and that content, and you create, and then you go and talk to some of these big cap tech companies. You will have to be coming from a position of power, no? And how do they push back on what you're asking for?
ROBERT THOMSON: Well, don't forget you go back to the original digital debate. It was, hey, guys and gals. You should be grateful that we're using your headlines or distributing your content. But there was a massive shift in power from creators to distributors. And there's a danger that that shift that has already taken place will be amplified many times over in the era of AI. Clearly, advertising revenue has shifted from the creator to the distributor. And so again, it really is incumbent on these companies to recognize that responsibility in the end to their own products and certainly, to society.
BRIAN SOZZI: We're about to enter an election season. It's going to be a pretty busy 12 months for all of us in this industry. How do you go upon covering it through your various publications?
ROBERT THOMSON: Well, the objective of our reporters has to be the objective of being objective. And that's what we'll be encouraging. Because we live in a world where there's a surplus of subjectivity. And the problem with AI is it can recycle subjectivity and pretend that it's objectivity. And we already see that in some of the AI snippets that we're tracking. And I think that's also incumbent on other news organizations to put some resource into tracking and to understanding, to divining digitally what's evolving, both for the sake of the value of their content but also to see how their content may be misused or abused.
BRIAN SOZZI: Within the context of election season, does the ad side of your business begin to pick up in anticipation of this? Or do advertisers say, hey, the last election was pretty contentious to say the very least. We're going to pull back a little bit on ads. We don't want our name associated with some of the stuff on the internet.
ROBERT THOMSON: Well, I think generally, people will focus their advertising on certain states because in the US unfortunately, certain states are kind of gimmies, and certain states are swing states. There'll be a lot of money going into those. So we're lucky that we have national digital footprints and influential ones. So I'd no doubt there'll be some benefit for us.
But you would hope more importantly that the advertisers also will hold the digital platforms to account in the sense that they shouldn't be associated, and they have to be discerning about which content that-- really, which content company they're keeping.
BRIAN SOZZI: We're asking a lot of leaders that we talk to here at the Goldman Conference what's on tap for 2024. What are some of your big bets that investors should be on the lookout for?
ROBERT THOMSON: Well, for us, keep an eye on Dow Jones. The B2B business there has grown significantly. The margin at Dow Jones in Q4 a year ago was 18.8%. In the most recent quarter, it was 24.4%. So the Dow Jones is not just the Wall Street Journal. It's also a high margin B2B business. We've bought a couple of companies. One called OPIS, another one CMA, which focuses on chemicals, and energy, and renewables. Understanding the power of Dow Jones but also its role in the board of News Corp, that's going to be our big push for the next 12 months.
BRIAN SOZZI: Tremendous admiration for the work you've done and respect for the work all of your teams put forward at News Corp. News Corp CEO Robert Thomson, thank you for joining us. We appreciate it.