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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 a
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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
to bypass state-controlled television channels."

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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.

Development since 2000

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

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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
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.

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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
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.
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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
• 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

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• 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
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
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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.

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

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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
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.

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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
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

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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.

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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