MCC314 Global Media IndustriesSession 10 Lecture

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

“The most influential Australian of all time…”

-The Bulletin, 2006

How can the most influential Australian of all

time be an American?!$%

How can the most influential Australian of all

time be an American?!$%

“Mr. Murdoch’s record speaks for

itself…”- John Hewson

“Mr. Murdoch’s record speaks for

itself…”- John Hewson

…the most original business figure Australia has produced…”

- Les Carlton, Melbourne Herald

Considered the most original business figure Australia ever produced

Genius for creating NewsCorp at present form and ability to arise from financial difficulty

News Corp structure and News Corp structure and performanceperformance

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

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

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

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.

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

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

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

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

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

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

“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 90s but

managed to survive with satellite TV investments

Key elements behind logic of acquisitions is high level of integration

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

Owning companies at different stages of the production of given product

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Vertical IntegrationVertical 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

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

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

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

Tried to purchase DirectTV (2000) owned by GMLoss 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)

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

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

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