Please explain to me

That may all be true but please what is his reasoning?

For that reasoning you have to look at the backstory.

So he had a deal with Google where his websites traffic would create advertising revenue which meant Google would then pay newscorp for generating income.
He then used the projected revenue to boost his creditworthiness when he purchased MySpace.
His traffic deal failed to create the traffic expected which means Google are not paying him what he forcast so he is stumped.
In typical murdoch practice as he failed in his deals objectives and he cannot buy google out of the game he is saying he won't play with them anymore.

How this is a sound buisness proposition?

It appears sound as an attempt to put pressure on Google.
Threatening to withdraw all traffic as a response to problems of failing to deliver a third of the traffic you had promised.