MCC 314 Global Media Industries Session 10 Lecture

� MCC 314 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 � “ 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

“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

� Considered the most original business figure Australia ever produced � Genius for creating News. Corp at present form and ability to arise from financial difficulty

News Corp structure and performance

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

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

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

Cable TV � Direct Broadcasting Satellite ◦ BSky. B (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.

Others � Harper. Collins ◦ 2 nd largest English-language book publisher � TV Guide (US) ◦ Largest circulation of consumer TV magazine � My. Space � American. Idol. com � New York Knicks (40%) � NY Rangers � Madison Square Garden

Official Global Expansion � In 2004, earned Aus$2. 75 B � Also the end of News. Corp in Adelaide � 2006, News. Corp 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

History of Murdoch’s Empire (1 st 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

History of Murdoch’s Empire 2 nd and 3 rd 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

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 20 th Century Fox & 6 TV stations from Metromedia ◦ Made part of the Fox Network (major TV network in the US alongside ABC, CBS and NBC

History of Murdoch Satellite TV � 1990 – invested on satellite TV in UK (BSky. B) ◦ ‘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

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

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 90 s but managed to survive with satellite TV investments � Key elements behind logic of acquisitions is high level of integration

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

Vertical Integration � Owning companies at different stages of the production of given product + +

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

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

Conglomerate Integration � Ownership of non-related companies ◦ Alan Bond’s ownership of TV network (Nine TV) as well as brewing, mining, education, tourism ◦ Air. Asia – 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 ◦ My. Space ◦ Alliance with Google

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 News. Corp to keep up with payments

Battles - Direct. TV � Tried GM to purchase Direct. TV (2000) owned by 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 Direct. TV after FCC regulated that Echostar’s purchase may result in satellite TV monopoly (more than 90% in US)

Battles - Stream � Merging of Stream and Telepiu pay TV ◦ Both companies were losing US$500 M a year ◦ Affected by advertising downturn after 9/11 ◦ 2002 – declared a quarterly loss of US$7. 7 B though not a direct cash loss ◦ Profited $1. 6 B compared to $671 M in 2001 due to cost efficiencies

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

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