Xvii) News Corporation

Over the years, Rupert Murdoch (who started in newspapers and now, in his 80s, controls a global media empire worth around US$ 80 million) has continually tried to re-invent his media empire (News Ltd) since first taking over the News newspaper in Adelaide, South Australia in 1953. For example,

- in 1964 launches the Australian-wide newspaper (The Australian)

- in 1969 goes international by buying newspapers (The News of the World and The Sun) in the United Kingdom; later on in 1981 he buys The Times

- in 1976 ventures into America by buying the New York Post

- in 1985 buys 20th Century Fox

- in 1988 launches Sky (now BSkyB)

- in 1990 News Corporation almost sinks under debt

- in 1996 launches Fox News Channel

- in 2000 invests in realestatecom.au (now REA Group)

- in 2005 his eldest son Lachlan quits News Corp

- in 2007 buys Dow Jones and the Wall Street Journal

- in 2008 in the Boyer lectures in Australia he talks about the threat to his media empire of the digital revolution, especially the rise of e-media

- in 2009 Chase Carey returns to News Corp as COO and since then share prices have increased around 2.5 times. He focused on the expansion of the cable TV business (generates around a 1/3 of the group's earnings before interest and tax) and started a US$ 10 billion share buyback. He replaced Peter Chernin who was concerned about the future of the newspaper business, especially the Dow Jones acquisition. The print newspapers have declined in financial importance in the global media and entertainment conglomerate. This is despite transforming the newspapers from relying on advertising revenue to more reliance on subscription revenues; the latter are comparatively more stable and not as susceptible to the business/financial/economic cycle.

"... News Corporation has essentially become a cable TV powerhouse with legacy newspaper, book, film and broadcast TV assets. Newspaper and book publishing...... information services account for only 9% of the group's earnings..."

Ben Holgate, 2013

- in 2011 News Corp buys Rupert's daughter's (Elizabeth) Shine organisation for $US 480 million; closes News of the World amid phone hacking scandal

- in 2013 News Corporation splits into 2 separate companies. This de-merger is to unlock value of the high-growth businesses around 21st century Fox and spin off the low growth assets into the new News Corporation with the aim of transferring printed newspapers into profitable digital products

- the impact of the phone hacking scandal (UK) is still working its way though the corporation

Thus, Rupert Murdoch has created one of the most powerful and influential media conglomerates from 2 small Australian newspapers he inherited from his father. On the other hand, he has had to survive a series of near disasters like

- threat of bankruptcy in the 1990s

- investigations into his British papers hacking into people's voice mails

- possible misuse of company funds to cover up sexual harassment allegations at Fox News

- concern by investors that Murdoch was more concerned with empire building than immediate financial gain

- differing opinions between his sons on how to handle the digital era

(source: Sarah Ellison 2018)

Impact of tech giants

"...the foray by Facebook, Amazon, Netflix and Google (FANG) into media and entertainment via online streaming and mobile programming is upending the movie and television distribution oligopoly that Murdoch has been a central player in for nearly 3 decades..."
John Kehoe, 2017

Fox was well-positioned until these Silicon Valley disrupters spent large sums of money in acquiring and producing streaming content to show on laptop computers, iPads and iPhones. These tech giants have larger potential audiences to work with
"...compared with traditional competitors, such as Viacom and Time Warner, Fox has internationalised its revenue streams in emerging markets such as India. It has managed to deal itself into 'skinny 'bundles - low-priced, slimmed-down pay-TV packages offering a limited number of channels..."
John Kehoe, 2017

Some past challenges for News Corp include

- buying MySpace for US$ 589 m. in 2005 when it was bigger than Facebook but failed to capitalise on it
- British politicians challenging Murdoch's proposed 61% share of satellite business Sky via Fox
- acquiring Sky channels in Britain, Germany, Italy, Ireland and Austria was meant to make it easier to deliver content to consumers but made it harder to take over
- News of the World's phone hacking scandal in the UK (2011)
- sexual harassment scandals involving Fox New's celebrities
- succession planning involving his sons (James and Lachlan), ie James became Fox CEO and Laughlan co-executive chairman (2015). These 2 need to prove themselves. Then in 2020 James resigned.
- Telco giant AT&T beat Murdoch to Time Warner
- Murdoch's close relationship with President Donald Trump

Offloading Fox's entertainment assets, will leave NewsCorp with news, sport and broadcast TV assets (including top-ranking, right-wing, channel Fox News). These outlets will still allow Murdoch to have political influence in USA, Australia and UK

It is interesting to note that in the mid-1990s News Corp was a disruptor via America's Fox Sport and Fox News in the media and entertainment industry. For News Corp, Fox turned into the US's most influential pay TV channel. More recently, News Corp is being disrupted by online streaming services such as Netflix, Amazon, etc
"...technology firms shift into distributing and creating low-cost content for consumers to watch on phones, tablets and computers. Tech giants Apple, Facebook and Google are also moving aggressively into this space..."
John Kehoe, 2017a

This has resulted in News Corp merging its 21st Century Fox's assets with rival Disney so that News Corp can concentrate on news and sport. This is another example of globalisation driving consolidation in the entertainment industry.