It was vintage Rupert Murdoch who appeared after dinner at D, holding back little in a wide-ranging discussion that touched on everything from his admiration for Barack Obama, Microsoft’s aborted bid for Yahoo, and even U.S. energy policy toward domestic oil drilling (”We didn’t buy Alaska to save a couple of elk.”)

The biggest news may have been the News Corp. chairman’s hints that he sees Sen. Obama as having a good chance of winning the November election. Noting that respect for politicians and Washington DC is at an “all time low,” Murdoch described Obama as a “rock star” and “fantastic,” saying his Republican opponent John McCain is “unpredictable” and “doesn’t know much about the economy.” While he is a “patriot” and a “decent guy…he doesn’t know much about organizing a campaign it would seem.”

Murdoch added that he wasn’t backing anyone, saying he wants to know more about Obama’s plans and the people around him. But he said he was involved in the New York Post’s decision to endorse Obama in New York’s Democratic primarily earlier this year.

A major issue in the election will be the economy. The “average American today is really hurting financially and that bodes well for” Obama, he said.

Murdoch also told the crowd that he was “mystified” by the outcome of the Microsoft-Yahoo takeover battle, particularly Yahoo CEO Jerry Yang’s success so far in holding off Microsoft despite strong interest from “the vast majority of shareholders” in accepting the software giant’s offer.

News Corp. was a participant in the long-running saga, of course, which Murdoch acknowledged. “They both had been talking to us,” he said, noting talks about the combination of News Corp.’s MySpace with Yahoo. “That seems to have gone away.”

As for Yahoo’s prospects as an independent company, Murdoch wasn’t optimistic. Yahoo has “a huge job ahead of them to hold onto their 20% [share of the search market], let alone increase it.. I wish them luck.” Google’s ever-increasing search market share is of course north of 50%.

Among his most pessimistic words were for metropolitan newspaper owners. Asked by an audience member what he would do if he woke up one day to find himself owning a metropolitan newspaper, he said “I would run.”

Earlier in the session, he had noted that in the last five or six months, the average newspaper had seen its ad revenue drop 10-30%. While he was optimistic about prospects for national titles such as The Wall Street Journal, which he recently acquired, he said metropolitan papers will have to be willing to accept 10% margins instead of 30% margins. “Some of them will disappear.” The solution? Newspapers should publish articles that people “want to read,” rather than “writing articles to win Pulitzer Prizes.”

The challenges facing metropolitan newspapers are an opportunity for the Journal, Mr. Murdoch noted, saying that smaller papers would likely cut back on journalism — but stressed he has no intention of doing so. He did however enlarge on past comments about his intention to shake up the Journal — noting that the number of editors who dealt with the average story in the Journal (8.3) was “ridiculous.” He also hinted at the possibility of raising the paper’s subscription price. “At the moment the average subscription of the Journal brings us about $125 a year. The New York Times is over $500. There is a long way to go in money from our readers.”

As for a touchy subject in Hollywood, the “windows” between release of movies in theaters, DVD and video on demand, Murdoch said he would “love to see all the windows closed,” allowing movies to be released simultaneously on different media. “But there is a lot of vested interested like theater companies” who are resisting these changes, he said. Change was gradually occurring, however.

Murdoch staunchly defended the Fox News Channel’s “Fair and Balanced” motto as accurate, adding that even Bill O’Reilly “gives both sides all the time” — a remark that prompted laughs from the audience.

So why aren’t there more liberal voices on Fox News, Kara Swisher asked? Murdoch replied that he would hire a liberal voice if he could find one that was strong enough.

“Would you hire Keith Olbermann?” Swisher asked.

Murdoch’s response: “No, I fired him five years ago… He’s crazy.”

Martin Peers