DEPARTMENT OF MANAGEMENT STUDIES

PONDICHERRY UNIVERSITY

STRATEGIC MANAGEMENT

ASSIGNMENT ON

NEWS CORPORATION

SUBMITTED TO

DR. CHITRA SIVASUBRAMANIAN

SUBMITTED BY

SALVA MANNEESH VARMA

2nd YEAR MBA

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TABLE OF CONTENTS

S. No Topic Pg. No

1 Introduction 3

2 Vision Statement 6

3 Mission Statement 6

4 Key factors for Success 7

5 Key Success Areas 7

6 SWOT Analysis 9

7 Corporate Strategies 10

8 Generic Strategies 11

9 Functional Strategies 12

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NEWS CORPORATION

INTRODUCTION:

News Corporation, often abbreviated to News Corp., is the world's third-largest media

conglomerate (behind The Walt Disney Company and the Time Warner Company) as of 2008,

and the world's third largest in entertainment as of 2009. The company's Chairman, Chief

Executive Officer and Founder is Rupert Murdoch.

News Corporation is a publicly-traded company listed on the NASDAQ, with secondary listings on the

Australian Securities Exchange. Formerly incorporated in South Australia, the company was re-

incorporated under Delaware General Corporation Law after a majority of shareholders approved the

move on November 12, 2004. Now News Corporation has two world headquarters. They are at 1211

Avenue of the Americas (Sixth Ave.), in New York City, in the newer 1960s-1970s corridor of the

Rockefeller Center complex and Surry Hills Downtown Sydney, NSW.

History

News Corp was created in 1979 by Rupert Murdoch as a holding company for News Limited.

News Limited was created by Murdoch from the assets he inherited in 1952 following the death

of his father, Sir Keith Murdoch, and subsequent expansion. The main asset left to him was

ownership of the Adelaide afternoon tabloid, The News. News Limited operates today as News

Corporation's Australian brand, operating out of Surry Hills, in Sydney.

Moving into the United States

News Ltd. made its first acquisition in the United States in 1973, when it purchased the San

Antonio Express-News. Soon afterwards it founded the National Star, a supermarket tabloid, and

in 1976 it purchased the New York Post.

In 1981 News Corp bought half of the movie studio 20th Century Fox, buying the other half in

1984. In 1985 News Corp announced it was buying the Metromedia group of stations, setting the

stage for the launch of a fourth U.S. broadcast network. On September 4, 1985, Murdoch became 3

a naturalized citizen to satisfy the legal requirement that only United States citizens could own

American television stations. In 1986, the Metromedia deal closed, and the Fox Broadcasting

Company was launched. This network, known on-screen as "Fox", can now be picked up in over

96% of U.S. households.

Expansion and Consolidation

In 1986 and 1987, News Corp (through subsidiary News International) moved to adjust the

production process of its British newspapers, over which the printing unions had long maintained

a highly restrictive grip. A number of senior Australian media moguls were brought into

Murdoch's powerhouse, including John Dux, who was managing director of the South China

Morning Post. This led to a confrontation with the printing unions NGA and SOGAT. The move

of News International's London operation to Wapping in the East End resulted in nightly battles

outside the new plant. Delivery vans and depots were frequently and violently attacked.

Ultimately the unions capitulated.

By 1992, News Corp had amassed huge debts, which forced it to sell many of the American

magazine interests it had acquired in the mid-1980s to K-III, as well spinning off long held

Australian magazines interests as Pacific Magazines. Much of this debt came from its stake in the

Sky Television satellite network in the UK, which incurred massive losses in its early years of

operation, which (like many of its business interests) was heavily subsidised with profits from its

other holdings until it was able to force rival satellite operator BSB to accept a merger on its terms

in 1990. (The merged company, BSkyB has dominated the British pay-TV market since.)

In 1993 News Corp acquired a 63.6% stake of the Hong Kong-based STAR TV satellite network

for over $500 million, followed by the purchase of the remaining 36.4% in July 1995. Murdoch

declared that:

"(Telecommunications) have proved an unambiguous threat to totalitarian regimes everywhere ...

satellite broadcasting makes it possible for information-hungry residents of many closed societies

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to bypass state-controlled television channels."

In 1995, the Fox network became the object of scrutiny from the FCC when it was alleged that its

Australian base made Murdoch's ownership of Fox illegal. The FCC, however, ruled in Murdoch's

favor, stating that his ownership of Fox was in the public's best interests. It was also noted that the

stations themselves were owned by a separate company whose chief shareholder was U.S. citizen

Murdoch, although nearly all of the stations' equity was controlled by News Corp. In the same

year News Corp announced a deal with MCI Communications to develop a major news website as

well as funding a conservative news magazine, The Weekly Standard. In the same year, News

Corp launched the Foxtel pay television network in Australia in a partnership with Telstra and

Publishing and Broadcasting Limited.

In 1996, Fox established the Fox News Channel, a 24-hour cable news station to compete against

Ted Turner's rival channel CNN.

In 1999, News Corp significantly expanded its music holdings in Australia by acquiring the

controlling share in a leading Australian based label, Michael Gudinski's Mushroom Records;

merging it with already held Festival Records to create Festival Mushroom Records (FMR). Both

Festival and FMR were managed by Rupert Murdoch's son James Murdoch for several years.

Also in 1999, The Economist reported that News Corps paid comparatively lower taxes and

Newscorp Investments specifically had made £11.4 billion ($20.1 billion) in profits over the

previous 11 years but had not paid net corporation tax. It also reported that after an examination

of the available accounts, Newscorp could normally have been expected to pay corporate tax of

approximately $350 million. The article explained that in practice the corporation's complex

structure, international scope and use of offshore tax havens allowed News Corporation to pay

minimal taxes.

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Development since 2000

In late 2003, News Corp acquired a 34% stake in DirecTV Group, (formerly: Hughes

Electronics), from General Motors for Electronics, operator of the largest American satellite TV

system, for US$6 billion. DirecTV Group sold in 2008 to Liberty Media's Malone, in exchange to

his News shares.

In 2007 News Corporation reached an agreement to purchase Dow Jones, publishers of the Wall

Street Journal, for an estimated $5.6 billion. On October 15, 2007 the corporation spun off a

business news channel from Fox News - Fox Business Network. The channel's lawyers were

"reviewing all of the fine details of the contract" between Dow Jones and CNBC, said Alexis

Glick, Fox Business Network's vice president of business news and the channel's morning anchor.

But, she added, "we will actively use" the other Dow Jones properties. "...this new channel is a bit

tedious. Somehow, business is more interesting when treated in a business-like way", commented

Rob Carrick in 16 October's Toronto Globe and Mail. On 8 February 2007, Murdoch promised

guests at the McGraw-Hill Media Summit that, "a Fox channel would be more business-friendly

than CNBC. That channel leap[s] on every scandal, or what they think is a scandal", he said. In

2009, News Corp established NewsCore, a global wire service set up to provide news stories to all

of News Corp's journalistic outlets.

VISION STATEMENT

Just as our assets span the world, our vision spans art and humor, audacity and compassion,

information and innovation.

whether in an American television series, an Indian game show, an Australian newspaper, an

English sports broadcast or an international box-office hit," the company website states.

MISSION STATEMENT

The creation and distribution of top-quality news, sports and entertainment around the

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world,"

Every day, hundreds of millions of people are entertained and enlightened by the authors and

actors, printers and producers, reporters and directors who fulfill our mission. That mission

remains unchanged after half a century of expansion and improvement.

KEY FACTORS FOR SUCCESS

1. Identifying a niche market that will ultimately result in growth, development and

profitability for example News Corp expanded into the middle east with culture specific

programming.

2. User Involvement: Being a media company the long-term success of the company depends

on the brand value and the user involvement in the products and services of news corp like

its films and programs.

3. Human Capital : Being a 50 year old company News Corp had nurtured high quality

human capital which is a factor for its continued success.

4. Global Integration: Being in the media business being a global player helps in economies

of scale and attaining entertainment content from all over the world.

5. Brand Name: 20th Century Fox, Fox news, and Dow Jones are respected brands in the

industry which contributes to the success of the company.

6. Technology Focus : News Corp’s focus on Technology has helped it to grow over the

years has helped it to diversify and grow

KEY SUCCESS AREAS

Business Processes

1. Strong acquisition focus : News Corp has been very aggressive in terms of its acquisition a

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major example being the acquisition of Dow Jones.

2. Partnerships: News Corp always had a focus on partnerships because the media business is

involved in many areas so to enter new segments and markets a company has to go for

strategic partnerships.

3. Maintaining High Liquidity : News Corp always maintained a high liquidity which helped

in fast and aggressive strategic acquisitions.

Organizational and human processes

1. Leadership

Rupert Murdoch being at the top level has provided the company with stable and strong

leadership that has been a big advantage for News Corp. Command and control"

leadership carried many organizations to very high levels of financial performance during

periods when competition was not so great and things didn't change very fast, but its time

has passed. The demands on the total organization are too great for a few people at the top

to call all the shots.

2. Vision

A compelling vision is one of a company's greatest assets. It can be a magnet for attracting

talented people. It can serve as a beacon when people temporarily lose their way. It can be

a source of energy and inspiration when people are encountering difficult obstacles. The

CEO has a primary responsibility to shape, communicate and sustain the vision, but this

need not be a solitary task. In fact the more people who can be involved in shaping the

vision, the better.

3. Communication

In most organizations, there have been 3 pervasive patterns that will no longer work in

knowledge-based organizations: (1) the primary flow of information was vertical—within

departmental walls that were often impermeable, (2) information was hoarded and used as

a source of power over others, and (3) people at the top often withheld crucial strategic

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information from those lower in the organization in the belief they couldn't handle it.

4. Teamwork

Teamwork is more crucial to producing results today than ever before, and at the same

time, the very nature of teams and their functions are changing rapidly. In the past it was

typical to go for long periods—even an entire career—as the member of one functional

team. Today, membership on more than one team is the norm, and it is unlikely that

anyone entering the work force will remain on the first team they join for more than a year

at most.

5. StrategicAlignment

Process reengineering and systems thinking are moving strategic alignment back to the top

of many corporate agendas. It has become crystal clear that many of the greatest

opportunities for productivity improvement lie at the interfaces of the processes used to

produce products and serve customers—and it is fruitless to excel in one process while

lagging in others. In fact, it's counterproductive.

6. Conflict Resolution

The new economy increases the potential for conflict in virtually every area of

organizational life. Stakeholders are more informed and frequently more demanding.

Employees are being asked to do more with less—without the promise of job security that

existed in the past. Aligning self-interests with corporate interests is not as simple as it

used to be. Alliances, mergers, and acquisitions bring together different cultures and set

the stage for major internal conflicts and power struggles. Developing good conflict skills

needs to be high on everyone's personal and corporate agendas.

SWOT ANALYSIS

Strengths

Diversified media and entertainment business

Consistent revenue and profit growth

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Strong library content

Weaknesses

No clear successor for CEO Murdoch

News Corp leadership maintains a "I know better than you" attitude about everything

Opportunities Alternative media outlets (i.e., online)

Dow Jones acquisition/integration

Newspaper and broadcasting market growth

HDTV growth

Multi-year sports agreements

Free to air Mobile DTV with 'up sell' opportunities

Threats

Increasing use of Digital Video Recorders (DVRs)

Growth of online video, alternative media

Economic slowdown in the US

Regulatory risks

A failure to pursue economic models that stray from 'direct pay’.

CORPORATE STRATEGIES

Corporate strategy refers to the overarching strategy of the diversified firm. Such a corporate

strategy answers the questions of "which businesses should we be in?" and "how does being in

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these businesses create synergy and/or add to the competitive advantage of the corporation as a

whole?" Business strategy refers to the aggregated strategies of single business firm or a strategic

business unit (SBU) in a diversified corporation. According to Michael Porter, a firm must

formulate a business strategy that incorporates either cost leadership, differentiation or focus in

order to achieve a sustainable competitive advantage and long-term success in its chosen areas or

industries. Alternatively, according to W. Chan Kim and Renée Mauborgne, an organization can

achieve high growth and profits by creating a Blue Ocean Strategy that breaks the previous value-

cost trade off by simultaneously pursuing both differentiation and low cost.

1. Diversification : News Corp has believed in diversification in related fields what

started as a Newspaper company has expanded into a media conglomerate

spanning TV , Movies Cable Networks etc. This also includes Geographical

expansion and diversification.

2. Vertical Integration : News Corp produces the programs and content for its own

channels and has in-house agencies providing all the content for its entertainment

content.

3. Economies of Scale and Synergy : In the media business scale is what matters

being an old company News Corp has established and strong distribution networks

which helps it to leverage its fixed cost and get profits.

4. Virtual Corporation : Although News Corp is a Newspaper Company that is offline

but it has made various forays to change into a virtual corporation it has acquired

major assets in this regard the most famous being my-space.

5. Blue Ocean Strategy : News Corp attempted to use the Blue ocean strategy by

having a combination of both low cost and differentiation it having various

businesses helps in product differentiation and due to its size it can drive huge

bargains in terms of cost.

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GENERIC STRATEGIES

Cost Minimization : News Corp due to its scale has been very successful in

minimizing costs and due to its content database it saves a lot of cost and due

to its scale its cost of production and distribution is very low.

Product Differentiation: News Corp delivers clearly differentiated products in

its market for example its Wall Street Journal is considered the official news

bulletin of the Wall Street it is much more than a news paper.

Market Focus: News Corp follows a clear market focus they produce content

and programs specific to market and consumers for example when people’s

taste changed and they started appreciating movies with specialized content

News Corp created a company called Fox Searchlight Pictures without diluting

the 20th century Fox Brand.

FUNCTIONAL STRATEGIES

Functional strategies include marketing strategies, new product development strategies, human

resource strategies, financial strategies, legal strategies, supply-chain strategies, and information

technology management strategies. The emphasis is on short and medium term plans and is

limited to the domain of each department’s functional responsibility. Each functional department

attempts to do its part in meeting overall corporate objectives, and hence to some extent their

strategies are derived from broader corporate strategies.

Many companies feel that a functional organizational structure is not an efficient way to organize

activities so they have reengineered according to processes or SBUs. A strategic business unit is a

semi-autonomous unit that is usually responsible for its own budgeting, new product decisions,

hiring decisions, and price setting. An SBU is treated as an internal profit centre by corporate

headquarters. A technology strategy, for example, although it is focused on technology as a means

of achieving an organization's overall objective(s), may include dimensions that are beyond the

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scope of a single business unit, engineering organization or IT department.

An additional level of strategy called operational strategy was encouraged by Peter Drucker in his

theory of management by objectives (MBO). It is very narrow in focus and deals with day-to-day

operational activities such as scheduling criteria. It must operate within a budget but is not at

liberty to adjust or create that budget. Operational level strategies are informed by business level

strategies which, in turn, are informed by corporate level strategies.

Since the turn of the millennium, some firms have reverted to a simpler strategic structure driven

by advances in information technology. It is felt that knowledge management systems should be

used to share information and create common goals. Strategic divisions are thought to hamper this

process. This notion of strategy has been captured under the rubric of dynamic strategy,

popularized by Carpenter and Sanders's textbook . This work builds on that of Brown and

Eisenhart as well as Christensen and portrays firm strategy, both business and corporate, as

necessarily embracing ongoing strategic change, and the seamless integration of strategy

formulation and implementation. Such change and implementation are usually built into the

strategy through the staging and pacing facets.

OPERATIONAL STRATEGIES

1. Supply Chain – News Corp believes in controlling the complete supply chain it

produces its own programs which are distributed through its own channels and this is

done through its cable networks.

2. Technology and IT –News Corp makes use of Technology and IT fairly well to

generate profits and to derive value all the advancements in movie making screening

and the satellite distribution has been possible due to extensive use of Technology and

IT.

3. Repackaging – Since it has presence in all the continents hit programs in one territory

are repackages and sold in other territories it helps a lot as you can expect the audience

response for example a famous program who wants to be a millionaire was repackaged

and made in India as Kaun banega Crorepati this helped in gaining much needed 13

market share in India and the middle east markets.

FINANCIAL STRATEGIES

1. Debt Financing – News Corp has made many acquisitions over the years but if we

observe the pattern although news corp enjoys a very good name in the equity

markets it has always gone for short term debt financing.

2. Mezzanine Financing – News Corp has gone for mezzanine financing to expand

various capacities it treats its subsidiaries like new businesses and they go for

individual mezzanine financing its like venture capital funding but on a project

level and for an established company.

ORGANIZATIONAL STRATEGIES (HR STARATEGIES)

News Corp is famous for using the old school of Human Resource Management so it calls its

HRM as Organizational Department.

1. Knowledge Management : New Corp being a knowledge driven organization it believes in

knowledge management so it has a huge database of entertainment content developed by it

over the years.

2. Pay for Performance : compensation structures at news corp show that they believe more

in variable component of the pay which is completely based on the performance of the

individual and the business unit.

3. Freedom to Senior Management : Senior management enjoys complete freedom in terms

of decision making this helps in running each business unit as a separate business this

helps in focus and accountability but this has also come under criticism for attitudinal

issue swith the bosses.

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MARKETING STRATEGIES

1. Brand management : Brand management plays a major role in handling marketing at

News Corp as it’s a service based media company in various geographies handling the

brand is very important it has created globally respected brands which it leverages

example Fox is a famous and established brand and 20th Century Fox has been there

for years now when news corp had to expand in a new segment of intelligent cinema it

used the same brand name to create Fox Searchlight Pictures.

2. New Product development : News Corp uses new product development as a strategic

lever it has always been bullish on new product development that has helped an age

old media company to be relevant for a changing environment and changing face of

the customers.

3. Associations : News Corp when it expands geographically it associates its brand name

with a local player or a celebrity to create more awareness and to internalize the brand

in the minds of the consumers.

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