News Corporation (or “News Corp”) is an international media company with annual revenues of more than $28 billion, making it the third largest entertainment and media conglomerate behind Time Warner Inc. and Disney (Hoover’s Company Records 2007). The company produces and distributes filmed entertainment for the theatrical and television markets as well as being a leader in direct broadcast satellite (DBS) distribution. News Corp is a major competitor in the print category with holdings in magazines, newspapers, and books. While it is an international company, more than 50 percent of revenues were generated in the United States and Canada. The Murdoch family owned 30 percent of News Corp as of 2007.
While News Corp began as an Australian company in the late 1970s, it became an American company, having been incorporated in the United States in 2004. The company’s chairman, Rupert Murdoch, was famous for producing racy newspaper headlines and titillating photographs of women to sell newspapers around the world. He brought that successful marketing strategy with him as he acquired an increasing number of media properties within the United States. In the satellite television business, as well, Murdoch transferred international successes – BSkyB in the United Kingdom and STAR in Asia – to the US market, acquiring 39 percent of DirecTV in 2003.
Mr Murdoch was famous for shaking up the industries in which News Corp competed. In 1986, Murdoch launched Fox Broadcasting – the first new broadcast network in almost 40 years. Eight years later, the Fox Broadcast Company forced the realignment of the American television landscape when the company acquired New World Communications, a television station group made up of major network affiliates. New World affiliates became Fox-owned and -operated stations, forcing the Big Three (the television networks ABC, CBS, and NBC) to find comparable stations in major markets throughout the United States. Simultaneously, Fox purchased the rights to air National Football League games – a bold move by a start-up network and one that led to significant growth for the fledgling network. Murdoch also shook up the 24-hour news business in 1996 with the ultra-conservative Fox Newschannel, demonstrating that viewers would watch a channel with a definitive point of view. A major strategic misstep, however, was the purchase of TV Guide magazine. The combination of a recession and high interest rates led to decreased sales, and Murdoch was forced to sell most of his US magazine holdings in 1991.
As of 2007, News Corp had eight divisions, including filmed entertainment, television, cable, DBS, magazines and inserts, newspapers, books, and other assets, which included sports, outdoor, and Internet properties.
Filmed entertainment included both motion picture and television production and was the largest division, representing 25 percent of the organization’s revenues annually. Twentieth Century Fox produced three of the top five bestselling pictures of all time – Titanic, Star Wars, and Star Wars Episode I: The Phantom Menace. Other hits included XMen, the animated feature Ice Age: The Meltdown, and Walk the Line. This division was also one of the major suppliers of programming for prime-time broadcast television as well as syndicated product. Notable shows include 24, Bernie Mac, and King of the Hill, as well as syndicated fare such as Divorce Court and Judge Alex.
Fox Broadcasting was made up of its on-air networks – Fox Broadcasting and My Network – as well as its station group. Fox was the largest US television station group, with 35 stations reaching 38 percent of the country (Albiniak & Downey 2007). Fox held duopolies – markets where they own more than one station – in nine markets, including New York, Los Angeles, and Chicago. The Fox Network grew to be a major broadcaster by using a strategy of cutting-edge programming. The network appealed to a younger target audience (18 –34) than the traditional networks of ABC, CBS, and NBC, which served adults (18 – 49). My Network TV was created in 2006 after CBS surprised the television industry by announcing the merger of Warner Brothers and United Paramount Network (UPN) into the CW Television Network, a joint venture of CBS and Warner Brothers Entertainment. Fox had been a major owner of UPN affiliates because of its 2001 purchase of Chris Craft, a company that had founded UPN with Paramount. Rather than change these affiliates back into independent stations, Fox developed a new network, MyNetworkTV, so named to be synergistic with MySpace.com, another News Corp property. This network presented 12 hours of programming per week, which consisted mostly of prime-time telenovelas, a popular international soap opera format.
Like its broadcast division, Fox Cable was known for edgy programming. Fox Newschannel, the home of Bill O’Reilly and Hannity & Colmes, was until recently the highest-rated news channel on cable, using the marketing line “Fair and balanced,” a claim perceived by some as perfectly accurate, and others as perfectly absurd. FX, the organization’s entertainment outlet, was home to highly acclaimed programs such as The Shield, Rescue Me, and Nip/Tuck, which pushed the envelope in terms of sexual and violent content. In addition, the company had a movie network, Fox Movie Channel, as well as numerous sports networks including Fox Sports Net, Fox Soccer Channel, and Fox College Sports. Fox Family, a childrenoriented network, was sold to Disney in 2001 for close to $5.3 billion, and became ABC Family. News Corp also planned to launch a business news channel in late 2007 (Angwin 2007).
DirecTV is News Corp’s direct satellite television service, as of 2007 a duopoly in the United States. DirecTV leads DISH, a division of EchoStar, with 13.5 million subscribers to DISH’s 10.5 million. To be competitive with cable systems that offered bundled services of television, cable modem, and phone service, News Corp created alliances with regional phone companies, such as Verizon and BellSouth, to provide comparable services to customers. In 2006, however, the company decided to exit the DBS category. DirecTV went to Liberty Media in exchange for Liberty’s 20 percent voting shares in News Corp. This deal solidified Murdoch’s control over News Corp while extricating the company from a slow-growth business.
News Corp also had magazine, newspaper, and book properties. While magazines had been a large segment of the company’s business, by 2007 most of its holdings in this area were newspaper inserts, including SmartSource® coupons. Its newspapers were primarily in Australia and Britain, with just one newspaper – the New York Post – in the United States. HarperCollins and Zondervan, a Christian book publisher, made up the book division.
News Corp’s other assets were a smattering of media properties, but most important was Fox Interactive Media. Twentieth Century Fox began selling downloadable movies through this division as well as through AOL. The most significant holding in this division was MySpace.com, an online networking site. There are also a number of online sports outlets including FoxSports.com, whatifsports, and Scout.com, a sports site with an emphasis on recruiting. In September 2005, News Corp also purchased IGN Entertainment, a community-based site for digital media, primarily video games. While News Corp stayed away from the dot-com space during the run-up of the early 2000s, through these recent acquisitions they made a significant commitment to increasing their online presence.
- Albiniak, P., & Downey, K. (2007). NATPE and new shows. Broadcasting and Cable (January 15). At www.broadcastingcable.com/article/CA6407454.html?display=Search+Results&text=station+groups#1%20Fox%20Television%20Stations, accessed February 9, 2007.
- Angwin, J. (2007). News Corp builds toward business TV. Wall Street Journal, p. B2 (February 9).
- Hoover’s Company Records (2007). At www.hoovers.com/news-corp./–ID 41816–/free-co-factsheet.xhtml, accessed September 16, 2007.