1 News Corporation By Team Vivaldi Spring 2008 MGT 693 Class Professor Degravel Case Study Presentation Team Vivaldi

2 News Corporation  Founded in a small Australian town in 1952  Impressive media and entertainment company with broadest global presence  Major assets include newspaper businesses, film and television production, major television channels, television stations, and book/magazine publishing

3 Issue  News corporation is trying to acquire DirecTV, the dominant provider of satellite television service in the United States  EchoStar, the second-largest satellite provider in the U.S, increased its offer to buy DirecTV to more than $26 billion VS

4 Strategic Logic of Acquiring DirecTV  Expanding dominant satellite distribution networks BSkyS in Europe and Star in Asia BSkyS in Europe and Star in Asia No distribution presence in the U.S No distribution presence in the U.S  DirecTV considered as “transforming acquisition” Establishes distribution presence of News Corporation in the U.S. Establishes distribution presence of News Corporation in the U.S.  Diversify News Corporations’ revenue stream

5 Benefits from the DirecTV Acquisition  DirecTV with Sky Global linkup Access to cheaper programming and advanced technology at the Murdoch controlled BSkyB Access to cheaper programming and advanced technology at the Murdoch controlled BSkyB Have with Sky Global’s satellite holdings and technology companies Have with Sky Global’s satellite holdings and technology companies  Acquiring DirecTV BSkyB’s expertise in customer management could be leveraged into DirecTV’s operations BSkyB’s expertise in customer management could be leveraged into DirecTV’s operations Diversify News’ revenue stream in the U.S. beyond the advertising market Diversify News’ revenue stream in the U.S. beyond the advertising market Obtain some synergies from common purchasing of set-top boxes and programming Obtain some synergies from common purchasing of set-top boxes and programming Monetize some of News Corporations’ unlisted assets such as STAR. Monetize some of News Corporations’ unlisted assets such as STAR.

6 Corporate Strategy  Multinational  Diversified across multiple products  Vertically integrated

7 Corporate Strategy  Multinational Major TV channels are in three continents and dozens of countries Major TV channels are in three continents and dozens of countries Newspapers owned in U.S., United kingdom, Australia, New Zealand, Fiji, and Papua New Guinea Newspapers owned in U.S., United kingdom, Australia, New Zealand, Fiji, and Papua New Guinea  Diversified across multiple products Major assets include newspaper businesses, film and TV production, TV channels, TV stations, and book/magazine publishing Major assets include newspaper businesses, film and TV production, TV channels, TV stations, and book/magazine publishing

8 Corporate Strategy  Vertical integration strategy Film Studios Film Studios TV Networks TV Networks Cable / pay TV platforms Cable / pay TV platforms

9 Themes and Patterns  News Corporation has been systematically engaged in the building of a geographically dispersed assets base through direct foreign investment, strategic partnerships, and mergers and acquisitions U.S. entry into film and broadcasting via acquisition U.S. entry into film and broadcasting via acquisition  News Corporation’s globalization strategy has also been marked by the significant role played by joint ventures and strategic partnerships in investments outside its home bases of the United States, Australia, and Britain Investment in Asia and Latin America Investment in Asia and Latin America

10 Weaknesses of Approach Weaknesses of Approach  Expanding too fast  Stepping on toes  Way too diversified  Bad timing

11 Risks Impacting News Core Strategies  Murdoch spent $75 million on Satellite TV  Sky and BSB merger  In 1992 BSkyB was acquired for $465 to increase subscribers  Paid premiums  Decisions were made too quickly  No business planning department

12 Deteriorating Core Assets  Network Television Need content and distribution Need content and distribution  Newspapers Shrinking advertising revenues Shrinking advertising revenues

13 SWOT Analysis

14 Alternative Actions  Achieve greater economies Scale—increasing output for a single product Scale—increasing output for a single product ContentContent Scope—increasing output across multiple products Scope—increasing output across multiple products DistributionDistribution  Intensify hit show development  Establish distribution presence

15 Recommendations  Leverage Twentieth Century Fox movie creation Heart of media industry Heart of media industry  Gain competency in TV show development Original programming vital (re-run revenue vs. brand) Original programming vital (re-run revenue vs. brand) Become more profitable with age (capital expenses decrease and syndication revenues increase) Become more profitable with age (capital expenses decrease and syndication revenues increase)  EoSca&Sco—acquire more stations and consolidate Operating margins increased (10%) Operating margins increased (10%)  Tap new business technology—Internet  Acquire satellite capability or create joint venture in cable network infrastructure Distribution presence Distribution presence

16 Societal Costs  Few major conglomerates create less competition Individuals have less options Individuals have less options Monopoly Monopoly  Media bias Filtered newsworthiness Filtered newsworthiness Homogenized news reporting Homogenized news reporting Media spin Media spin

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