News Corporation -Corporate Strategy

1. News Corporation Corporate Strategy
Analysis – (1990 - 2011)

2. Table of Contents
Summary - Corporate Strategy
Executive Structure
Timeline - Acquisitions
Traditional vs 2 Sided Market
Bet on MySpace vs Facebook
Performance - Stock, Industry
Rupert Murdoch – The Last Tycoon
Future – Growth, Risks

3. Summary
Corporate Strategy (1990 -2011)
• Corporate Strategy – Sharing of Activities
• Behavior Based Control - is used in an uncertain environment, where as outcome based control is used in
certain environment and is easy to implement and cheap
• Vertical Integration - Maintaining the content and distribution dynamics. Easy to manage the contracts. In
case of information goods its vital because managing contracts are very difficult
• Information Goods - 2 sided market for (digital/information) goods have infinite economies of scale, 2
sided or 1 sided market with physical goods have finite (diseconomies) of Scale
• Ownership – Minority economic interest with voting control (Other Example - Google)
• Internal SSP Remains Same - Entrepreneurial Structure & Rapid Decision Making, even though business
have grown globally and in different segments, but same structure and decision making style is used
• Dirty Digger Still Placing Bets - Direct TV, MySpace
• Rupert Still In Control – No Succession plan
Corporate Strategy - Spectrum
Investment Corporate Sharing of Business
Portfolio Transfer of
Strategy Restructuring Strategy Activities Strategy
Management Skills
Berkshire Partners Textron Newell News Corp
Manage Uncertainties Exploit Uncertainties
Low Cost High Cost
Low Value High Value
Source: Google Search, Creating Corporate Advantage , David J. Collis & Cynthia A. Montgomery

4. Corporate Strategy
Resource Continuum
General Nature of Business Special
Wide Narrow
Scope of Business Same content is used
in different formats
Transferring Coordinated Mechanisms Sharing
Outcome Type of Control Behavior
Small Corporate Office Size Large
Source: Creating Corporate Advantage , David J. Collis & Cynthia A. Montgomery

5. Executive Structure
Mar. 2011 Rupert Murdoch
Chairman & CEO
(79)
James R Murdoch
Chase Carey Arthur M Sikind
Deputy COO, David F. DeVoe Joel Klein
Deputy Chairman, Sr Advisor To
Chairman & CFO Exec VP Office of
President & COO Chairman
Chief Executive (63) Chairmen
(56) (71)
Europe & Asia (37)
Roderick I Edington Natalie Bancroft
Non Exec Director Non Exec Director
(60) (30)
2004 Rupert Murdoch
Chairman & CEO
Chase Carey Arthur M Sikind
Lachlan Murdoch David F. DeVoe Peter Chernin
President & CO - Exec VP to
Deputy COO CFO President & COO
COO Chairman
Change in
Legend New Present in 2004
Responsibility
Source: News Corporation, Data Monitor 2010, Annual Report , 2010

6. Timeline - Post 2003
2009
Acquisition (118), Others Restructured Fox Businesses
Consolidating Film &TV Production
Businesses in a single unit and TV 2011
2005 Networks Biz into a single unit Acquires Shine Group
2007
Acquires My Space Sale of Direct TV, International TV
(Intermix Media) for Took 16% stake in Increased Stake in the German Pay- Production group for
0.77B in US. News Corp (11B) TV platform, Premiere, to 30.5% 0.67B
2003 Increased its stake in Sky (Owned by Elisabeth
back from John
34%of Acquired IGN Entert., Deutschland (formerly Premiere) Murdoch – Succession Plan
Malone (Liberty
Direct TV Community-based from 30.5% to 39.96% in Play ??)
Media) by trading
(Satellite internet media & 41% stake of Direct
Broadcast services co. for Video Restructured its Asian broadcast Becomes Carbon Neutral
TV
Network) is Games & other forms of businesses into three units, including
Acquired in digital entertainment for STAR India, STAR Greater China and Launched The Daily,
Acquired Dow
US 0.65B in cash Fox International Channels National US publication
Jones (WSJ) for 5.6B
built specifically for the iPad
2004 2006
2008 2010
Shifts Domicile to US Launched new general
HarperCollins & WSJ formed 3- Signs to acquire 90% of
Company's shares entertainment broadcast
year publishing partnership to Wireless Generation,
were listed on the network MyNetworkTV
develop books written by the Privately-held Education
New York Stock
Journal's expert editors and Technology Company for
Exchange Announced $900 million
reporters 0.36B in cash
deal with Google in 2006)
Voluntarily transferred its stock
exchange listing in the US from NYSE
To NASDAQ Global Select Market
Source: Google Search

7. 2 Sided vs Traditional Market
Overview – Traditional Market
• Value moves from Left to Right and Information flows from Righto Left
• Growth beyond some point usually leads to diminishing returns. Maximum Profit Contribution when MC
= MR, that is it suffers from diseconomies of scale
Cost Revenue
Suppliers Price Advertise
Create or Move Distribute Service Customers
(wholesale) (Retail) Promote
Upstream Value Chain Downstream
News (Paper Based) Traditional Market
Create Price
Content Content Distribution Customers
(News) (News)
Source: Strategies for 2 Sided Markets, Thomas Eisenmann, HBR

8. 2 Sided vs Traditional Market
Overview – 2 Sided Market
• Value moves in both direction from Left to Right and Right to Left
• Marginal Revenue and Profit contribution is always increasing as user base grows, Network effect leads
to infinite economies of scale (for information goods only)
Revenue Revenue
PLATFORM
Cost
Cost
Customers Customers
Upstream Value Chain Downstream
News (Paper Based) 2 Sided Market – Old Model
• No economies of scale as this is not a digital good
Advertisers Create Price
(Ads, Content Content Distribution Customers
Classifieds) (News) (News)
Source: Strategies for 2 Sided Markets, Thomas Eisenmann, HBR

9. 2 Sided vs Traditional Market
News (Digital/Online) 2 Sided Market - New Model
• Economies of scale are infinite as this is a digital good, because Marginal Cost for distributing to an
additional customer is nearly zero
Advertisers Create Price
(Ads, Content Content Distribution Customers
Classifieds) (News) (News)
Other Examples
Company Industry Type Platform Type
Google Web Search/Advertising Audience Builder
Amazon (ebay, Trading Post) E-Retailer Matchmaker
Monster (Seek) Recruitment Matchmaker
iTunes Music Matchmaker
Betfair Gambling (betting) Matchmaker
AP Moller-Maersk Logistics Cost Sharing
Source: STL Partners, Telco2.0 , Strategies for 2 Sided Markets, Thomas Eisenmann, HBR

10. 2 Sided Markets
Google Model
Free Product for
Cheap Adverting for Low Cost Per
End Users
Brands Transaction
(Subsidised)
Google Platform
• Massive investment in Google Platform
• Google Indexes 34B+ pages
Source: STL Partners, Telco2.0

11. 2 Sided Markets
Network Effect - Google vs Vodafone
$18
$16 Google, $17b
$14
$12
Billions
$10
$8
$6
$4
$2
$- Vodafone, $3b
1 2 3 4 5 6 7 8
9
Years After Inception :
• Network Effect - Six Times larger in 9 years in comparison to largest mobile operator
Source: STL Partners, Telco2.0

12. MySpace vs Facebook
Myspace Failure – Old Media Model
• Identified an opportunity with Myspace (Social Media), but couldn’t leverage it
• Turned out to be a losing bet, in discussions to sell for $100M
Reason
• Applied Old Media Model in a 2 a Sided Market
• Locked in Advertisers (via Google Search) on Upstream Side, and let the Customers Create Content
(primarily blogs). Didn’t let/opened Upstream Side to other Customers
• Networks effects on Downstream side are not leveraged on Upstream side – leading deterioration in asset
and momentum shifting towards other platform (Facebook)
Revenue
Upstream Downstream
Only 1 MYSPACE Customers
Cost
Customer Content Distribution
(Advertisers) Platform (Subsidised)
Source: The Australian, Google Search

13. MySpace vs Facebook
Facebook Success – New Media Model
Reason
• Applied New Media Model in a 2 a Sided Market
• Opened Platform for various Upstream Customers – Hosted Content from various players, Ads, 3rd
Party Application Developers
• Opened Platform for various Downstream Customers – Market Research Companies, Subscription (soon)
• Networks effects on Downstream side are leveraged on Upstream side – built mass and momentums
Revenue Revenue
Upstream Downstream
Various FACEBOOK Customers
Cost
Content Distribution Paid Data
Customers Platform Research
Revenue
Source: The Australian, Google Search

14. Performance
Stock Market - Trend
Global Financial Crisis
Near Bankruptcy
Competitors – Disney, Warner
Source: Google Finance

15. Performance
FY 2010 Rev. By – Division, Region
Book Other
Publishing 5%
4%
Newspapers Australasia
and Filmed and Other
Information Entertainment 16%
Services 23%
18%
United
Integrated States and
Television Europe Canada
Marketing
13% 30% 54%
Services
Direct 4% Cable &
Broadcast
Network
Satellite
Programming
Television
21%
12%
Source: News Corporation, Company Profile, Mar 2011, Data Monitor

16. Industry & Competitors
Status & Trends
Industry Walt Time
Attributes News Corp. Viacom
Disney Warner
Revenue in Billion by 2010
781.7 32.778 38.063 26.888 9.34
(Size)
Growth (CAGR% 2006 -2010) 1.7 5.9 2.2 (7.69) (-20)
Expected Revenue Growth by 2015 913.3
Expected Growth
3.2
(CAGR% 2010 -2015)

17. Products & Services
FY - 2010
Filmed entertainment:
• Production and distribution of motion pictures
Television and cable:
• Television programming
• Cable and satellite network programming
• Direct broadcast satellite television
Magazines, inserts, books and newspapers
• Interactive programming guides
• Magazines
• Newspaper publications
• Book publishing
Others:
• FM radio
• Production and distribution of promotional products and services
• Online programming
Source: News Corporation, Company Profile, Mar 2011, Data Monitor

18. Rupert Murdoch
The Last Tycoon
• A lot of people claim they have ten-year plans or five year plans. But basically, the most successful businesses are
the opportunistic and you take your opportunities when they come — Rupert Murdoch, 1985
• Probably the most inventive, the bravest deal-maker the world has ever known – Andrew Neil, Sunday Times, 2002
• For better or for worse, our company is a reflection of my thinking, my character, my value - Rupert Murdoch, 2004
• The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow — Rupert
Murdoch, 2008
• I just want to live forever— Rupert Murdoch, 2007
Source: Times Magazine 2007, The Last Tycoon, Google, Forbes

19. Future
Growth
• Digital Economy - As more and more content of various formats are digitised, more opportunities
will be available to grow at minimal cost
• Sports League, Formula One Racing – buying a sports league will give necessary information and
direct access to contents and its rights
Risks
Succession:
• News Corp is managed centrally and predominantly by Rupert, to this date there is no succession
plan being made public
Increasing Competition:
• Operates in a highly competitive business, Leads to Pricing Pressure, impacts Rev. & Market Share
Piracy:
• May adversely affect the company's revenues derived from films, television shows, books
and DBS (Digital Direct Broadcast Satellite )programming
Legal Disputes:
• The company is involved in various legal disputes – Shine (2011), Valassis Comm. (2006, resolved in
2010)
• Lawsuits may adversely affect the market reputation of the company, which in turn will negatively
impact its growth and investors' confidence
Source: Business Spectator News Corporation, Company Profile, Mar 2011, Data Monitor

20. Thank You
End of Document