What makes everyone think they haven't done a lifetime ROI analysis and discovered that search referals aren't profitable ? - the only thing we have is speculation. What Murdoch has is hard data about visitors and ad-click through rates. I'm willing to bet they have a much better understanding of the value of search referals than anyone here.

Going pay-only is a risky strategy, everyone knows that, but the only way they'll know if it works if they do it. Business isn't always about accepting the status quo, sometimes you have to gamble.