News Corporation is an international media company. They operate in several business areas like Television, Cable Network, Direct Broadcast Satellite, Magazines, Newspaper, Book publishing and Film. The company operates 25 TV stations. It is the leading publisher of English newspaper in the world. It operates in U.S., U.K., Australia, Asia, Europe, and New Guinea. It provide customer with the quality they from the company. The company added more than 36 additional channels in Europe, Latin America and Asia and the profit is also rising continuously. In Italy they also have gain popularity because of introduction of 'Sky Italia'. The reason for people are ready to pay for 'Sky Italia' is that it offer digital video recorder which allows customer to store their favorite movies and television programme in HD quality (News Corporation, 2009).
Broadcasting Business of TNC
Television: Around 15 percent to 18 percent of News Corp.'s total revenue comes from their television business. In the year 2009 their income from television business was excluded 4.6 billion dollar. In the end of June 30 their revenue from this segment has decreased to 21 percent i.e. 1205 million dollar. The reason for this decline is the less number of Stations were sold in the year 2008. The revenues from advertisement were also decreased because of weak market conditions. News Corp's television business mainly includes 'MyNetwork TV', FOX Entertainment and 27 TV stations possesses by the company. Their revenue comes mainly from advertisements from different sponsors of TV shows. Their main competitors are other TV station and Cable Programme Network, which compete for various TV shows, revenue from advertising, and audiences (News Corporation, 2009).
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Satellite Broadcasting Television: This section of News Corp. consists of 'Sky Italia'. It provides television and broadband services via satellite to home directly. The audio & video quality, interactive programming and better service quality are the main factor of gaining more market in the respective segment. Around 12 percent to 11 percent of companies' revenue comes from this segment. In the year 2009 the revenues of 'Sky Italia' has increased by 11 million dollar. Their number of subscriber also increased to 4.8 million in 2009. Their main competitors are those company which gives high quality graphics and sound quality, good entertainment, various broadband internet provider and DTT (Direct to Home) service providers (News Corporation, 2009).
Generic Strategy of News Corp.
News Corp. has started their business in the year 1923. Their first business was situated in Australia. In thirty years they have expanded much and establish two national magazines, twenty newspaper and also own a National Newspaper in Australia. These acquisitions have made the News Corp financially strong and that helps them to expand their business in U.S and U.K. also. With the help of good strategy the company manages to become world leader in its respective field. News Corp. has different acquisition strategy for expansion and growth. They took over the companies and gave the right to use to new technology and markets (Stirling University Business Club, 2010).
Aggressively buying Competitor Company is News Corp's business strategy. News Corp. owns the Fox Entertainment which makes movies. News Corp.'s television business and movies has extended worldwide, around every home. The company has released many epic movies in the year 2002. Twentieth Century Fox which work under Fox Entertainment of News Corp. has made an exclusive profit of around 473 million dollar from the movies like Ice Age, Planet of the Apes, and Star Wars (Murdoch, 1999).
The Fox interactive media of News Corp. has acquired 2 internet corporations for enhancing their internet operations. They also acquire one of the popular networking sites MySpace.com. Besides MySpace.com. The Fox Interactive Media also acquire Newroo, a news company of San Fransisco and KSolo a company of New York. It can enhance the customer's experience and empower the users. According to Arrington, Michel the owner of techcrunch.com the price of the two organization bought by Fox Media is approximately 10 million dollar each. The News Corp. business strategy is to aggressively acquisition and built a loyalty among net users. In this way more customers can use and spend excess time in their site and watch their programme.
News Corp. spent 1.3 billion dollars for purchasing the internet companies also they purchase gaming & sports companies like Scout.com and IGM (Rosenbush, 2006).
Strategy of Diversification through Acquisition
Always on Time
Marked to Standard
Diversifying new market is one of the expansion strategies of News Corp. Their first business was newspaper business and from there they have diversified their business towards direct broadcast satellite TV. For example first they have developed their business from movie channel to sports channel like 'Sky Sports'. This acquisition has result in increase of one million subscribers of News Corp. in 6 weeks. The company has recognized new market and establishes them into it, which is the main reason for their success.
News Corporation has owned the Satellite TV Company named Sky Italia (SI). It is a very popular company of Italy and has almost 4 million subscribers. SI has one third of all U.K. direct broadcast TV satellite subscribers and also it is a leading broadcaster of sports, entertainment, movies and news. The News Corp. also possess 20 percent of the famous TV Broadcast Company of Asia i.e. TATA Sky (News Corporation, 2010).
In the year 2010 the News Corp. has gave a proposal to acquire the 'British Sky Broadcasting' i.e. 'BSkyB'. Now News Corp. has acquire a 39 percent of the BSkyB's share i.e. total 686,021,700 shares (News Corporation, 2010).
Bowman's Strategy in News Corp.
The News Corp. has employed Generic Strategies which is used by Cliff Bowman and Richard D' Aveni. Their strategy clock shows the differentiation strategies which can give competitive advantage to the organization. Strategy clock help to understand the changing needs of customer and also the market requirement. There are various strategies in the strategy clock of Bowman, these are: 'No Frills Strategy', 'Low Price Strategy', Differentiation Strategy, Hybrid Strategy, 'Focused Differentiation Strategy' and 'Failure Strategy'.
The News Corporation has followed the differentiation strategies of Bowman. The objective is to achieve competitive advantage over rival organization. According to Bowman for accomplishing the differentiation approach News Corp. has to depend on three aspects:
First is the identification of customer and understand their needs,
Second is to identify the major rivals and competitors, and
Third is to imitate the difficulties of accomplish successful differentiation (Strategy Explorers, 2008).
Reason Behind Diversify Strategy
News Corp. was a smallest media and news company in the year 2001. But now it has a broadest global presence. They diversify their business to Direct Broadcast Satellite TV and acquire many companies. The diversifications are the main reason for its success and develop. News Corp. now established themselves in the field it diversifies. Although it always possesses a potential risk but in order to grow and survive a firm must diversify their business to some related business. It creases a health business situation and allows growth of organization.
In the year 2003 News Corp. acquire Direct TV which is the leading satellite TV provider in America. This acquisition makes News Corp. the world's largest satellite provider at a profit of 6.5 billion dollar in the year 2003. The company has now 12.6 million customers in U.S (Kumar & Madhab, 2004).
Advantages of diversification:
By diversifying its business a company can gain efficiency because it can utilize the all resources of the organization by diversifying themselves into new activity.
Diversification also increases the marketing power of any company. Company can earn extra surpluses which other competitor company are no able to do.
Diversification can improve the quality of services. For example News Corp buys Fox Entertainment which provides the company a broader platform i.e. making movies and films.
The sales and distribution can also rise by a good brand name. A renowned brand identity always provides a benefit in new market for an organization.
By diversification a company doesn't need to depend on a single business anymore, if one business is not performing well and making losses, company can recover with it with other business and thus can control the risk (Scribd, n.d.).
Disadvantages of Diversification
A diversification to other business can also lead to slow growth of company's original business.
Diversification needs a great deal of management costs. A new business always needs a lot of money to manage properly.
Merging of company can also incur losses. Some business unit can collapse by other unit which is already making profit. For example when the Sky TV of News Corp. faces loss of almost £10 million / month then the overall profits of News Corp. is also affected.
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The political and legal restriction also can be a hindrance of diversification strategy.
Sometimes an acquisition may result unsuccessful if there is a disparity between the original business of the organization and diversified business of the organization. This can also lead to bear huge losses, because the company has already spent for acquiring another company (Scribd, n.d.).
Diversity is a significant element of News Corporation's successful business strategy. Implementing and supporting the diversification process has leaded the company to develop and growth the business all over the world and long term success. Over the years News Corp. has maintained to enhance the diversity and increases the amount of profit.