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Rupert Murdoch & News Corp

MCC314 Global Media Industries Session 10 Lecture. Rupert Murdoch & News Corp. Introduction. Murdoch is a bizzare character ; known for “tits and bums” - notorious headlines on his papers

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Rupert Murdoch & News Corp

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  1. MCC314 Global Media Industries • Session 10 Lecture Rupert Murdoch &News Corp

  2. Introduction • Murdoch is a bizzare character ; known for “tits and bums” - notorious headlines on his papers • “ Up Yours Delors”, “ Headless body at Topless Bars”, tabloid scoops on Prince Harry, Amy Winehouse, Kate Moss, page 4 girls • Nevertheless has ear of presidents and prime ministers around the world • Has a chair in Language & Communications School at Oxford University • Prompts great admiration or hatred for what he has done for journalism

  3. “Mr. Murdoch’s record speaks for itself…” - John Hewson How can the most influential Australian of all time be an American?!$% …the most original business figure Australia has produced…” - Les Carlton, Melbourne Herald “The most influential Australian of all time…” -The Bulletin, 2006

  4. Considered the most original business figure Australia ever produced • Genius for creating NewsCorp at present form and ability to arise from financial difficulty

  5. News Corp structure and performance

  6. Newspapers • In OZ, 60% of all dailies; • The Australian, The Daily Telegraph, The Herald Sun, The Courier Mail, The Sunday Times • In UK • The Times, The Sun (largest English-language daily in the world), News of the World (largest Sunday paper in the world) • In US • The New York Post

  7. Broadcasting • Fox Network • 33 TV stations in US • Fox Broadcasting Company – produces The Simpson, The Practice • Fox Cable • Fox News Channel • Fox Sports • NatGeo Channel • 20th Century Fox – produced Moulin Rouge, Avatar • Fox Video – distributes products to the Far East

  8. Broadcasting Successfully purchased Dow Jones (publisher of Wall Street Journal) on 1 August 2007

  9. Cable TV • Direct Broadcasting Satellite • BSkyB (Britain, Europe) • Stream (Italy) • Star TV (HK, China, India, and other Asian countries) • 25% stake in Foxtel together with Telstra and Packer’s Publishing and Broadcasting Ltd.

  10. Others • HarperCollins • 2nd largest English-language book publisher • TV Guide (US) • Largest circulation of consumer TV magazine • MySpace • AmericanIdol.com • New York Knicks (40%) • NY Rangers • Madison Square Garden

  11. Official Global Expansion • In 2004, earned Aus$2.75B • Also the end of NewsCorp in Adelaide • 2006, NewsCorp listed on the NYSE • Based almost entirely in NY • Reason: • Better access to capital and investors in the world’s financial markets; • Demonstrating acute awareness of conglomeration and fundamental business of the media as a profit machine

  12. History of Murdoch’s Empire (1st Stage) • 1952 – Rupert took charge of News Ltd in Adelaide after death of father • 1960 – extended to Sydney by buying The Daily Mirror • 1964 – started the only national daily, The Australian

  13. History of Murdoch’s Empire2nd and 3rd Stages • 1969 – bought News of the World and The Sun (UK) • Successful with huge cash flow from international stage • 1970 – bought San Antonio Express, The Chicago Sun and New York Post

  14. History of Murdoch’s Empire - Ventures • 1970 – 1980 – Diversified entrepreneurship • 50% of Ansett Airlines (now defunct) • Purchased Channel 10 in Sydney and approached satellite TV operations in UK and US • 1985 – bought 20th Century Fox & 6 TV stations from Metromedia • Made part of the Fox Network (major TV network in the US alongside ABC,CBS and NBC

  15. History of Murdoch -Satellite TV • 1990 – invested on satellite TV in UK (BSkyB) • ‘colossal investments in unproven high-risk satellite-based new media ventures’ Barn, 2000) • Invested on Star TV • Japan • HK • Asia • Australia • Other parts of Asia

  16. Murdoch’s Business Strategy “Rupert is a strange combination of opportunist and long-range visionary, and they don’t really go together, I think. . . He’s always had the long-range vision of a global media company with worldwide reach that could make money and affect events. Within that very, very broad framework, when opportunities come up, he grabs them” - Brill’s Content, 2001

  17. Murdoch’s Business Strategy • Driven by his character and personality • Often engaged in high-risk strategy, purchased newspapers no one touches • Almost lost News Corp early 90s but managed to survive with satellite TV investments • Key elements behind logic of acquisitions is high level of integration

  18. Murdoch’s Business Strategy • INTEGRATION • The ability to produce a mix of companies and businesses that integrate into a well-functioning whole • Three types of integration: • Vertical integration • Horizontal integration • Conglomerate integration

  19. Vertical Integration • Owning companies at different stages of the production of given product + +

  20. Vertical Integration • E.g, a company owns a chain of three companies of different roles: newspaper mill; newspaper distributor; news agency • Profit at each level eventually allows parent company to reap revenue • Each company also receives individual priority treatment/ operates with cost consideration to survive

  21. Horizontal Integration • Owning more than one producer at a given stage of the production process. • Effective for advertisement • Using fully the resources (printing presses) • E.g, running morning and evening paper allows printing press to work throughout the day

  22. Conglomerate Integration • Ownership of non-related companies • Alan Bond’s ownership of TV network (Nine TV) as well as brewing, mining, education, tourism • AirAsia – tourism, telecommunications, sports • Favorable to advertising of other companies with low rates • Murdoch has always been focused on traditional broadcast media but has now forayed into Internet • MySpace • Alliance with Google

  23. Business Tactics and Strategies • Favorable interest rates from his relations with banking executives • Loans with 146 banks • “Judicious juggler” of assets • Manages to balance the levels of loans for buying new companies against selling off of old assets • Cash Flow • Actual money in hand with which to do things. • Comes from advertising enabling NewsCorp to keep up with payments

  24. Battles - DirectTV • Tried to purchase DirectTV (2000) owned by GM Loss with Echostar, main satellite TV of Direct TV competitor • Persistent due to his foresight of the promise of global satellite TV (esp. in US) • 2003 – succeeded in purchasing DirectTV after FCC regulated that Echostar’s purchase may result in satellite TV monopoly (more than 90% in US)

  25. Battles - Stream • Merging of Stream and Telepiu pay TV • Both companies were losing US$500M a year • Affected by advertising downturn after 9/11 • 2002 – declared a quarterly loss of US$7.7B though not a direct cash loss • Profited $1.6B compared to $671M in 2001due to cost efficiencies

  26. Recent Dealings • 2005 – purchased MySpace.com for US$580M • Figured to be the most magnificent decisions by Murdoch • With 100M personal profiles • MySpace has the potential to “fully integrate” the bulk of NewsCorp’s products • Advent of new interactive media, has potential to fully integrate horizontally, vertically and conglomerate to next generation global media consumers

  27. Recent Dealings • Winning Dow Jones & Company – access to The Wall Street Journal and its historical archives • USD 5.6 billion sale • WSJ reach and strength: • Newspaper – 2.1 million • WSJ.com – 980,000 paid subscribers • 16 Pulitzer prizes • Goodwill and global reputation

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