News Corporation

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Rupert Murdoch is without question the best known media tycoon since William Randolph Hearst. Like him or loathe him, his News Corporation single-handedly defined the nature of the modern media corporation between 1975 and 2010. No other group has come close to emulating its combination of broad-ranging assets and ground-breaking technology and strategy. And while other groups have been forged by many hands, News Corporation is very much the result of one man's personal vision. Yet the phone hacking scandal at his British newspaper division, which reached a crescendo in summer 2011 and threatened to spread contagion to other parts of the group, created the biggest threat to-date to the Murdoch empire. Partly as a result of these problems, Murdoch separate the global publishing business into a separate entity from July 2013. This took on the name News Corporation, while the old parent company now trades as 21st Century Fox. Murdoch turned 85 in 2016, yet he still maintains direct personal control over all aspects of his wide-ranging empire, even if day-to-day responsibility is now delegated to his sons. 

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Wall Street Journal New York Post
HarperCollins Foxtel
The Times Fox Sports Australia
The Sun Amplify
The Australian Storyful
Times Literary Supplement Herald Sun
News America Marketing  

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 24th Aug 2017: 21st Century Fox's proposed takeover of Sky TV in the UK is still struggling to win clearance in the face of staunch opposition from activist groups, as well as certain corners of the media and Parliament. In the mean time, though, the Murdoch clan have turned their attention to Sky's Australian counterpart Foxtel. In the break-up of the old News Corporation conglomerate, most broadcasting businesses were transferred into 21st Century Fox, but what was then a minority stake in Foxtel was retained in the slimmed-down News Corp group. Shortly afterwards, News Corp bought out fellow stakeholder Consolidated Media to become 50/50 co-owner of Foxtel with telecoms group Telstra. It has now proposed the merger of its wholly owned Fox Sports channel into Foxtel. If that deal goes through, News Corp would become the 65% owner of the merged company, while Telstra's long-held 50% stake would reduce to 35%. The two owners could also float part of the company's equity at some point in the future. Separately, Australian regulators gave News Corp's co-chairman Lachlan Murdoch the green light to acquire collapsed local broadcast network Ten in partnership with another local media tycoon Bruce Gordon. Murdoch and Gordon had been expected to each acquire 50% of Ten through their private investment companies. Instead, however, the network was acquired by US group CBS.

Adbrands Weekly Update 17th Aug 2017: News Corporation reported disappointing results for the year to June as a result of writedowns against its newspaper businesses in the UK and Australia, and a large loss at Australian satellite broadcaster Foxtel from the shutdown of its Netflix rival Presto. The group's most lucrative business by far was digital real estate - including the websites Realtor.com and Move - which generated operating profits of $324m on revenues of $938m. Combined group revenues slipped 2% to $8.1bn, but a large impairment charge of almost $930m against newspapers and the $295m loss contribution at Foxtel resulted in a net loss for the year of $740m. Last year the group reported a profit of $177m.

Adbrands Weekly Update 15th Jun 2017: In an almost unprecedented move by any major commercial TV broadcaster, Australia's Network Ten called in administrators following the decision by three of its leading shareholders - including News Corp and Fox co-chairman Lachlan Murdoch - not to support renewal of a A$200m loan facility when it expires at the end of this year. Ten is the country's third largest commercial broadcaster, and home of its most watched non-news show, Masterchef. But in around two years it has gone from being the most profitable network in Australia to near financial collapse following a series of disastrous changes to its schedule, including expansion of news coverage to replace mainstream entertainment series such as The Simpsons. Ratings plunged as a result of those changes, with an inevitable knock-on effect on financial performance. For the half-year to April, Ten posted a net loss of over A$230m. Its publicly quoted shares were suspended from trading yesterday, having fallen to just 16 cents, from A$1.40 last October. Current levels value the company at A$60m, or around US$45m. Lachlan Murdoch's private investment vehicle Illyria holds around 7.5% of Ten's shares, while News Corp's Foxtel cable channel holds a further 14%. Media tycoon Bruce Gordon holds 15% through investment company Birkentau. He and Murdoch have agreed to merge their interests to "negotiate and facilitate" a restructure of the business and seek a new investor or buyer for the business. They denied they had plans to take full control of the channel, a move which would also conflict with current regulations regarding media ownership in Australia.

Adbrands Weekly Update 6th Apr 2017: A stream of further major advertisers around the globe suspended advertising on Google's YouTube and third-party Google Display Network sites following a report from The Times of London newspaper two weeks ago which demonstrated that ads from blue-chip companies were appearing on or alongside extremist and hate group content. Google's chief business officer Philip Schindler has given several interviews in an attempt to play down the size of the problem. He told tech blog Recode that only very few ads had slipped through Google's brand safety filters onto inappropriate content. "I don’t want to take away from the importance of the problem and the fact that we need to get it right, but the numbers are tiny, tiny." Google says that inappropriate videos had attracted less than 1/1000th of a percent of leading advertisers’ total impressions. Schindler said Google is developing more rigorous and wide-ranging filters and is working with independent monitors such as ComScore to oversee brand safety. However, he also suggested that "over the last few weeks, someone has decided to put a bit more of a spotlight on the problem". Asked by Recode if he thought anyone was actively campaigning against Google, he said "That’s not how I would say it. There’s a lot of spotlight on the problem at the moment. And advertisers just don’t like something like this to be dragged out into the public. And they’re unhappy with that." Though the story has been widely reported in the media since it was first published by The Times, newspapers in general and titles owned by News Corporation in particular - including The Times and the Wall Street Journal - have arguably been most vocal in their criticism. News Corp has long campaigned against the damage inflicted on creators of quality news coverage by opportunistic "clickbait" websites fed by programmatic advertising. News Corp Australia this week launched a trade advertising campaign asking advertisers: "Do you really know where your ads are today? News does."

Adbrands Weekly Update 10th Nov 2016: Media groups reported generally lacklustre results for the latest quarter. Publishers especially are suffering from steep declines in advertising revenues. News Corporation reported a $15m loss for 1Q, following a $175m profit a year ago. Currencies played their part, but the key factors were weakness in the global print advertising market as well as an exceptional write-off against Australian streaming service Presto, an unsuccessful attempt to compete with Netflix, which was recently shuttered. News Corp CEO Robert Thomson warned that the biggest threat to future growth is the over-commercialisation of digital media. "We are seeing... mayhem in the ad market," he said. Flagship title The Wall Street Journal, for example, suffered a 21% plunge in ad revenues over the quarter, including digital channels. Part of the blame, Thomson suggested, lies with ad agencies. Too much of their ad tech, he said, "is fad tech", and programmatic digital buying systems merely waste money by placing ads on low cost, low quality sites. As a result, some advertisers, "have their products bobbing around in bilge water," he said. "Hype and hip are not alternatives to quality and integrity... We are seeking to attract loyal readers with quality content and not digital drive-bys distracted by vacuous, contentious clickbait". Turmoil in News Corp's news & information services division was offset by continuing strong growth in digital real estate services such as realtor.com. This was again the group's single most profitable business during the quarter.


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Background

Free for all users | see full profile for current activities: Australian-born and Oxford-educated, Rupert Murdoch inherited two newspapers in 1952 after the death of his father, who had been the much respected editor of the Melbourne Herald, a far-flung component of the British-based Northcliffe Newspapers group (now part of DMGT). Privately, Sir Keith Murdoch also held a controlling interest in the Queensland Newspaper Company, publishers of the Adelaide News and Sunday News. It was this regional business which the 22-year-old Rupert Murdoch, then a trainee journalist on London's Daily Express, took on. Not content with print alone, by 1960 he had secured the license for Adelaide's Channel Nine television station, and used the profits from this increasingly successful operation to move into the mainstream, acquiring Sydney's Daily and Sunday Mirror. In 1964, he launched The Australian, that country's first national newspaper. By 1968, Murdoch's empire down under was worth over $50m, with a broad range of newspaper, television and magazine interests. It was time to venture overseas.

In 1968, the News of the World, Britain's best-selling popular Sunday paper, came to the market. After a bruising takeover battle against rival bidder Robert Maxwell, Murdoch captured the prize. Just a year later, he trumped Maxwell again, buying failing popular daily The Sun from IPC for just £50,000. The two papers became the engine for a new empire. Murdoch made The Sun more sensational, introducing topless models on page three of every issue. That feature alone probably led to the paper's rise in circulation from 800,000 to over 3m by 1972. The profits generated by the paper allowed Murdoch not only to add additional Australian newspapers to his portfolio, but take a controlling 40% stake in London Weekend Television, the then-struggling weekend broadcaster for the capital city.

Meanwhile, Murdoch began to turn his attentions to the US. In 1973 he acquired the San-Antonio Express and News for $19m, and launched a daily tabloid, the Star. In 1976 The New York Post became the 84th newspaper in the group's portfolio. To counter his reputation for downmarket sensationalism, Murdoch turned his attentions to more traditional newspapers. In 1976 he narrowly missed the chance to buy the UK's oldest upmarket Sunday paper, The Observer. But he achieved his goal five years later, capturing the even more prestigious Times and Sunday Times newspapers when Thomson put its loss-making portfolio up for sale.

But America was playing an increasingly important part in Murdoch's strategy, and so was television. The same formula which had achieved success in Australia and the UK was put into practice in the US. Murdoch used his newspaper properties as a springboard into cable, television and cinema. In 1983, the Chicago Sun-Times was his biggest acquisition to-date, costing $100m (but sold three years later). Following that, his first steps into broadcast were unproductive. A majority stake in satellite broadcast trial Skyband came to nothing, and his attempt to acquire Warner Communications (a predecessor of Time Warner) was also unsuccessful, though he briefly became its biggest shareholder. But the second half of the decade saw a series of triumphs. In 1985, he pulled off the $575m acquisition of 20th Century Fox, one of the biggest Hollywood studios, as well as a package of upmarket travel and lifestyle magazines from Ziff-Davis. A year later, he became a US citizen in order to acquire Metromedia, the country's leading group of independent TV stations.

Also in 1986, Murdoch moved his UK newspaper properties to a new high tech facility in east London, leading to an all-out battle with the all-powerful British printing unions. After a long and bitter fight, backed by Margaret Thatcher's government, Murdoch was victorious and the power of the union was destroyed. The move saved Murdoch around £60m a year in costs, pushing Times Newspapers into profit for the first time in years. In 1987, News Corp acquired the Australian Herald and Weekly Times group, giving Murdoch control of over half of his home country's daily newspaper circulation. He also bought out British book publisher Collins (having taken a 40% stake in 1981) and US publisher Harper & Row, combining the two as HarperCollins. Then came the 1988 acquisition of Triangle for what was then a staggering $2.85bn. This US magazine group owned a portfolio of leading titles including the #1 magazine, TV Guide. The following year, the group launched Sky Television in the UK, the world's first satellite broadcasting company (see BSkyB profile for more).

All of Murdoch's moves during the second half of the 1980s entailed not only huge risk, but also substantial levels of bank debt. As interest rates rose and the economy moved into recession, News Corporation began to pay the price. One of the most expensive risks was Sky, which took much longer than hoped to reach financial mass. Forced to restructure to save the group from its debt burden, Murdoch sold off many of his smaller publishing interests. One victim was the sizeable magazine portfolio, grouped as Murdoch Magazines. By the end of the 1980s this included the likes of Elle (in the UK), Mirabella, New Woman, Premiere and other leading titles. The majority of the US titles were sold to K-III in 1990, the British ones to EMAP. The Australian portfolio was sold to Matt Handbury, Rupert Murdoch's nephew, but continued to trade under the Murdoch Magazines name.

In 1993, NewsCorp took control of Hong Kong-based Star TV, a satellite channel ultimately capable of reaching the vast Chinese audience. By 1995, Murdoch was fully back on course again. In 1996, he launched Fox News, a cable news channel designed to compete against CNN. He followed this with the acquisition of direct marketing company Heritage Media for $1.3bn, and Pat Robertson's cable TV company International Family Entertainment for $1.9bn. Murdoch's main interest in Heritage was its Actmedia subsidiary (now News America) which produced in-store marketing and advertising coupons for 40,000 supermarkets, drug stores and mass-merchandise outlets across the US.

In 1999, the group began a complicated restructuring of its relationship with Liberty Media, the pay-TV arm of cable operator TCI, which had been acquired by AT&T a year earlier. Liberty had been News Corp's partner in Fox/Liberty Networks, the cable company which owned US channels Fox Sports Net, FX and others. NewsCorp bought out Liberty's 50% interest in Fox/Liberty Networks, in return for a stake in News Corp itself. At the same time, Murdoch sold his valuable TV Guide magazine group to publicly owned United Video Satellite Group, one of the country's leading cable operators, formerly controlled by Liberty. Restructured as TV Guide Inc, News Corporation and Liberty kept a 44% stake in the operation, until the company was then merged with cable and TV technology business Gemstar. News Corp ended up with a 21% stake in TV Guide-Gemstar. This increased to 38% after a series of share swaps in 2000 and 2001, through which Liberty took an 18% stake in News Corp.

However, as the internet economy exploded in 1999 and 2000, critics began to snipe at the group, claiming it had lost the head start it gained in the 1980s and early 1990s. At the time, financial markets and media pundits alike were convinced that TV broadcasting would be overtaken by the new medium of the internet. Although Murdoch had been the first to launch a successful satellite television service, he had struggled to transfer his power in the UK to other countries. US service ASkyB was slow to launch, with the result that competitor DirecTV took the lead, and Murdoch was eventually forced to sell his own service to smaller rival Echostar. Similarly Japan's JSkyB was swallowed up by SkyPerfecTV! 

Despite some early dabbling, the group had steered clear of new media after a disastrous early failure in the UK. News Corporation had acquired community ISP Delphi Internet Services in 1993 for around $12m. But Delphi was ahead of its time, and Murdoch sold the business in 1996 after racking up huge losses. The following year, News Corp came close to acquiring online news channel Pointcast, only to watch as that business also failed. As a result, the group became far more cautious than other media groups with regard to the internet. At the time this led to much criticism, but ultimately the group was proved right in its scepticism. News Corp made its biggest investment in internet businesses by purchasing a 10% stake in online health network Healtheon WebMD for around $1bn, mostly in stock and advertising space, and merged its Health Network cable channel into it. When the internet boom came crashing to a halt, News ended the partnership, regaining control of the Health Network. 

There were other financial problems in 2000 and 2001. During 1999, Lachlan Murdoch, then running the group's Australian operations, had invested £125m to acquire a 25% stake in One.Tel, an Australian company offering low-cost international telephone calls. The business went bust in 2000, and News Corp was left with a percentage of the company's substantial losses. These deals proved an irritating distraction from Rupert Murdoch's main project in 2000 and 2001. With retirement on the horizon, he began assembling a final show-stopping deal that would crown his career. The group announced plans to consolidate all its satellite TV interests in a single, separately quoted business, Sky Global Networks, which would be floated in the biggest ever media IPO. The new company would group together all News Corp's holdings in satellite broadcasters across the UK and Europe, Asia and Latin America. However it lacked a presence in the world's biggest market, the US. News Corp opened negotiations late in 2000 to acquire DirecTV, the satellite broadcaster owned by General Motors subsidiary Hughes. However talks proceeded slowly, and in 2001 Hughes announced a deal to sell its business to rival Echostar instead. In a remarkable stroke of fortune for Murdoch, that deal was later blocked by US regulators, allowing News Corp to acquire control of the business on the rebound in 2003.

In a surprise announcement in 2005, Rupert Murdoch's eldest son Lachlan announced his resignation as deputy COO of the group. Previously regarded as his father's likely successor, he is reported to have felt that his position within the group was being undermined by Murdoch senior's continuing hands-on involvement with day-to-day business. This friction is thought to have been heightened by growing tension between Murdoch and his adult children over their inheritance. Until recently, the controlling stake in News Corp was to have been split after Rupert Murdoch's death by his four grown-up children. However Murdoch is now thought to have told his family that his two infant children by third wife Wendi Deng will also receive equal shares in the controlling trust.

Despite Rupert Murdoch often-stated commitment to newspaper publishing, the group finally began to consider plans to spin off its print division as a separate entity in summer 2012. Such a move had long been canvassed by shareholders, to remove the drag effect on News Corp's more profitable entertainment assets. The UK hacking scandal made that strategy even more appealing. The group will now spin off its global publishing businesses into a separate publicly quoted entity during the first half of 2013, although still under the control of the Murdoch family. The spun-off company - which will retain the News Corporation name - will also take charge of the current group's other interests in Australia, including Foxtel and Fox Sports. See full profile for current activities


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