Yeah, he's crazy like a fox.
1) He gets lots of free publicity complaining about Google (and some people will buy into his point of view.)
2) He gets Microsoft to pay for him for his extortion.
Despite holding movie studios (20th Century Fox, Fox Searchlight), TV networks (Fox, STAR), cable (Fox, FX, National Geographic) and internet properties (Hudu, MySpace, Rotten Tomatoes, IGN) and publishing companies (Wall Street Journal, Harper Collins), he can's switch to a paid model alone. There's too much competition. Only WSJ works behind a paywall because it's a tax writeoff for so many subscribers.
So instead of getting subscribers to pay, he's out hunting for other deep pockets. Google has turned him down, but Microsoft is desperate for leverage so they're willing to pay. Murdoch will sign a time-limited agreement with them and take the cash. If the experiement fails (he loses too much revenue) he contract ends and he's no worse that he was to begin with. If he wins, and other media companies take their content off line, or require payment in some way, he laughs all the way to the bank.
Still don't want him running the country, though.