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c-document_file127889

c-document_file127889

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Published by Sarvesh Jain

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Published by: Sarvesh Jain on Mar 08, 2011
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SUMMARY'The news corporation'At 30 June 2000 TNC was the third largest media business in the world, after Time Warner and Disney. TNC was the leader in the business because of its global reach, its sweeping ambition and the extend to which it was the creation of one man.Early years and growth to 1980.The origin of TNC was the establishment of a local newspaper in 1923. In 1980 TNC was the only national newspaper of Australia; furthermore they had two national magazines and over twenty provincial newspapers. The Murdoch family hadnearly 45 per cent interest in the company. The rest of the interest was acquired in book publishing, television broadcasting,film making, record production, farming and transport interests.The profitability of this Australian base was the springboard to multinational status.In 1968 TNC purchased the important UK-based News of the World Organisation. In 1981 the acquisition of TimesNewspapers Ltd. took place. From 1973 TNC also operated in the United States with the purchase of the Express publishingCompany. In 1970 expansion here occurred in the areas of local newspaper publishing and in magazine publishing.Television and film making.In 1980 TNC accelerate its real growth and development. However, 1984 saw the beginnings of a US based major geographical and product shift, which aimed to transform TNC into a vertically integrated global media group that had aplace in all parts of the media industry.After some acquisitions TNC became restructured into three principal operating groups:* Fox Television Stations (1986) owned and operated six independent television stations.* (FBC) Fox Broadcasting Company (1986), distributed programming by satellite to independent affiliated televisionstations.* Twentieth Century Fox Film, financed, produced and distributed television programmes and motion pictures throughoutthe world to cinemas, television broadcasters and on video.Implications for TNC where that revenues and operating profits increased but so too did debt levels.Rupert Murdoch - The wizard of Oz.TNC is an organisation that is keenly linked to its chief executive. In the late 1980's the headquarters of TNC employedbarely 60 people. The management structure of TNC was very informal with no defined responsibilities. At the same timethe management style was supplemented by an extremely efficient reporting system. They had a weekly document namedthe 'Flash' for which each operating unit a summary of its operating results provided.Maintaining control was also achieved by detailed telephone briefings and unannounced visits to check in person the detailsof a business's activities and management. Furthermore R. Murdoch looked outside of the business to the regulatoryenvironment that might constrain his activities. Many commentators have also suggested that his political friendship havebought him influence in this area. Today, R. Murdoch and family control 30 per cent of TNC, but for practical purposesMurdoch is the company.Towards the 1990s - The sky is the limit?During the 1980s TNC continued to expand and develop its traditional product and market areas. TNC made severalsignificant acquisitions, with this their debt increased. In 1988 R. Murdoch was obligated to commit TNC to a significantdebt reduction programme. TNC launched in 1989 Sky Television, a direct-to-home satellite broadcasting televisionnetwork. Satellite broadcasting represented a new approach to the distribution of programme material.TNC took a controlling interest in Satellite Television plc which distributed English-language television programming bysatellite to cable systems in Europe. By 1988 the company broadcast four channels, Sky Channel, Sky News, Sky Moviesand Sky sports. In 1988 TNC launched a new four-channel Sky service transmitted trough a new satellite system calledAstra. For this they brought in managerial talent from across TNC. The launch target was met, but it had been a rush.Individual satellite receiving dishes became available at a price and size that made them affordable and usable by millionsof households across Europe. Because of this they had the possibility to distribute to the customer direct-to-home andmoving from free-to-air to a subscription based service. Because of fewer subscriptions than expected, Sky television hadlots of losses that where influencing TNC. In 1990, Sky television merged with BSB.
 
In 1990 other severe problems materialised TNC, for example a protected strike, invests in new printing presses and aslowing of the economy. These problems resulted in a gap and TNC's market value fell while borrowings rose. In 1990TNC began negotiations for the refinancing of its dept divided over a total of 146 banks. In February 1991, TNC enteredinto a three-year, near A$9 billion debt reduction and A$700 million bridging loan agreement.On the reboundAfter raising cash through asset sales, announcing plans for flotation and paying all the debt due in 1992, TNC's importantissues lay with business directions. Rupert Murdoch set out his view of TNC's long term future which concentrates on theprinciples including further strengthening the company's balance sheet, improving and expanding existing businesses,building new businesses, fostering creative process and strategic planning.IN August 1995, the second largest US long distance telecommunications operator had paid 2 billion to have 13,5 percentstake in TNC. This resulted in the decrease of Murdoch family holding to over 30 percent. However, MCI had only amaximum of 20 percent investment in TNC and was obliged to vote with the majorityDue to upgrading printing facilities, existing newspaper businesses in Australia and the UK benefited from the reducedproduction costs. In 1995, over half of TNC's profit was generated from the printed world of newspaper and magazines.However, profits were gained from the screen, from films and from television increasingly.Content is KingThrough BSkyB, TNC introduced the subscription based broadcasters which was seen important especially for sports. Thesubscription based broadcaster could help control the content that was received by the consumer to ensure receipt of allrevenues due. This required the development of set top decoder boxes and encryption technology which makes BSkyB achannel "gatekeeper". Due to this competitive advantage, BSkyB now distributes the programme channels of other mediacompanies through joint ventures. The company could increase its revenue through subscription. The strategy of sports-ledprogramming was viewed by Murdoch as his "battering ram" for entry into new markets and was exported to other areas.However, the central battle for media giants is to buy television rights to the most popular sports events, therefore manymedia companies involved in joint ventures. Besides sport and film, it was found that news and animation are potential toget audiences.During the 1990s, the economics of broadcasting in the US changes dramatically with regard to the increase in the demandfor content which become expensive to produce or to purchase.In 1998, TNC restructured its US media interests into a new entity namely Fox Entertainment Group Inc (FEG). This aimsat creating a clean new vehicle for investors who wanted to buy into the US entertainment industry without having to master the complexities of TNC. By June 200 TNC owned 83 percent of FEG which operates in five segments including filmedentertainment, television stations; television broadcast network, other television businesses and cable network programming. From the restructuring, for the year to June 200, turnover at FEG reached 8,6 US billion and operating profitwas over 650 US million....And Global Is GoodAccording to Rupert Murdoch his corporation did not had a detailed strategic plan, because of the rapidly changes in themedia business. Three key answers regarding the globalisation of the media were answered positively by this media-tycoon, which are "Is a global communications network a reality?", "Are there really going to be worldwide networks?" and"Is it really going to be possible for an advertiser to achieve, in practice, a single order with the media of his choice aroundthe world?". The globalisation tends to go into one direction, which was heading for the American model, which was about"producing strong demand for American style films and television programmes". TNC was able to distribute its televisioncontent, halfway the year 2000, to 75% of the worldwide population. The world's largest pay- television operator, whichwas BSkyB, was extending its position throughout Europe, by acquiring stake of Kirch (largest pay television operator of Germany) and Stream (an Italian pay television operator). Not only Europe was subject of acquisition activities, also Asia,and specifically Hong Kong became part of the globalisation of TNC. In 1993 STAR TV became part of the business,which was quite special, since this satellite company only broadcasted free-to-air programs to almost two-thirds of theworld's population. Since STAR remained unprofitable, Rupert Murdoch changed the strategy into a "be global, act local".Therefore the largest movie library of China had been acquired and several agreements were made with local producingcompanies. Developing a pay based structure for the Asian market remained quite difficult. Another problem that occurredwere the political leaders. In the year 1993 Rupert Murdoch claimed that "advances in the technology of 
 
telecommunications have proved an unambiguous threat to totalitarian regimes everywhere", as a result within one monthChina prohibited the legal individual ownership of satellite dishes. The authorities were given the opportunity to control theprograms by using TNC's decoding technology. During the years they acquired more satellite companies in Japan, Australiaand New Zealand. In Latin America they were operating together with other partners in a joint venture. Sky Global wouldbe the new entity that deals with the satellite business. The reason for this restructuring project was the believe that thesuccesses of BSkyB could be used for the other businesses.The SuperhighwayThe technological development resulted in competitive changes (and will result in the future). From aerial to satellite andcable systems, other changes that influence the competition are political decisions which have been made in the past.Liberalisation and deregulation of national broadcasting companies had a huge impact on the formerly typical monopoliesor oligopolies. One of the developments which is the digital compression technology, created a whole new opportunity for the businesses. More data could be transferred by using existing distribution roads.Three effects are being described by Johnson and Scholes, which is firstly an increase of programme channels, secondly theavailability of new services, which allows the viewer to decide what to see and thirdly products could be developed on thebasis of Internet via television.BSkyB stopped the analogue transmissions in 2001, in order to satisfy the existing and also new subscribers it offers a freedigital package. Given the fact that this investment will cost a lot of money, they decided to suspend the dividend paymentsof 1999.The introduction of a PVR (personal video recorder) in the UK (in cooperation with TIVO) was the next step in a series of set top boxes.Investor's expectations of the use of broadband reach very high heights. Home shopping is the magic word that should resultin high revenues. Since the signal uses the existing lines, traditional television distributors should be aware of theopportunity to distribute products by using broadband. This means they will become an ISP(Internet Service Provider) or will have to cooperate with such a company.As a result ISP's become aware of the new opportunity to become media distributors and purchase the content themselves.Also other companies become increasingly aware of the technology development by investing money into producingcompanies in order to distribute the content by using their own methods.A worldwide project of Rupert Murdoch is the World Box. Three boxes are being developed, which can decode multichannel television, enabling interactive services, harddisk for recording programmes. The third box (for the next generation)will have multi-functional options.And into the millenniumThe issue of successor came to a main point of TNC, though Murdoch has a senior management team. However, Murdochpreferred to do things himself in the near future when he was asked about the successor. John Malone was supposed to be apossible person who can take over TNC.However, in the future Murdoch still would be a focus character in TNC.CHAPTER 2: MAIN QUESTIONS OR PROBLEMS IDENTIFIED AND STATED.After reading, rereading and analyzing the News Corporation case, there are principal questions that need an answer. Theprincipal questions are found out on the basis of the long term goals and the mission statement of the News Corporation inorder to find out what the News Corporation should do in order to be better off in the future. The main problem as well asprincipal questions are formulated as follows:Problem statement:How do the following factors (finance, leadership, environmental changes and expansion) influence the strategydevelopment in the past and how will they influence the strategy in the future?Research questions:

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