News Corporation's Digital Dilemma
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Case Code: BSTR210 Case Length: 14 Pages Period: 1999-2006 Pub Date: 2006 Teaching Note: Not Available |
Price: Rs.400 Organization: News Corporation Limited Industry: Media, Entertainment, and Gaming Countries: Australia, US Themes: Mergers, Acquisitions, Strategic Alliances |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
News Corp's Internet Initiatives
During late 1990s, News Corp's Internet strategy was to use its websites to promote its strengths in its newspapers and publishing businesses. The company's websites in Australia and the UK were based on this strategy. For the US market, it planned differently...
Internet Beckons Murdoch Again
After the dot com crash, only a few dot com companies such as Amazon.com, eBay, MSN, Google and Yahoo!, survived. These companies slowly but steadily grew in size and their websites saw a gradual increase in revenues from online advertisements. By the end of 2004, online advertising became the fastest growing segment ahead of traditional media advertising...
FIM's Acquisitions
In July 2005, FIM made its first acquisition when it bought Intermix Media (Intermix) - an online company with a network of thirty websites including the popular community portal MySpace.com - for US$ 580 million.
Commenting on this, Murdoch said, "Intermix is an important acquisition for News Corp, instantly doubling the number of visitors to our sites and providing an ideal foundation on which to increase meaningfully our internet presence." Analysts described the acquisition as a bold move...
Offering Triple Play Services
In October 2005, News Corp's BSkyB, the largest pay-television channel in the UK, acquired Easynet, an Internet Service Provider (ISP) with a significant broadband presence in the UK, in a deal worth US$ 385 million. This acquisition was undertaken in response to the competition that News Corp's satellite television was facing from the cable TV industry in the UK. The cable TV industry had invested heavily to offer triple play services to its customers...
The Road Ahead
Analysts termed the acquisition spree of News Corp aggressive and in the right direction. According to Greenfield, "They are aggressively buying their way into an Internet strategy from nowhere, three months ago." They felt that the popularity of IGN and MySpace.com would give News Corp. websites the necesssary traffic and it was up to the company to convert them into ad revenues and even profits...
Exhibits
Exhibit I: Financial Performance of News Corporation (2001-05)
Exhibit II: Internet Advertising Revenues in the US (1997-2004)
Exhibit III: Top 15 Countries by Broadband Subscribers (2005)
Exhibit IV: Internet Initiatives of Various Media Companies
Exhibit V: A Note on Myspace.Com
Exhibit VI: Global Shares* of Display Advertising Revenue by Medium (%)
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