News Corporation 8/14/12
Assets News Corporation is a "global media company" invested in cable network programming, film and television production and distribution, and publishing (1). Through cable networks like FOX News, FOX Sports Net, and FX, the Company can distribute news, television shows, and sports through cable network programming to televisions across America. Fox International Channels also "operates, develops and distributes primarily factual and general entertainment channels in various countries in Europe, Latin America, Africa and Asia" (4). Recently, in 2009 the Company formed Asianet Communications and forayed into South India regional programming. News Corporation is invested in the production, licensing, marketing, and distribution of television and movies. Fox Film Entertainment's goals are to distribute movies in theaters, homes, and abroad. News Corporation's production companies such as Twentieth Century Fox generate the most revenue when the shows they produce are syndicated off network or distributed through DVD. Fox Television Stations "owns and operates 27 full power stations, including stations located in nine of the top ten largest designated market areas" and attract advertisers by appealing to specific 18-49 age groups (12). MyNetworkTV is another News Corporation syndication service that was originally a television network but transitioned solely to syndication in 2009, possibly because of the harsh economic climate. SKY Italia is a daughter company involved in the direct satellite broadcast business distribution of "more than 180 channels of basic, premium and pay-per-view programming services via satellite and broadband directly to subscribers in Italy" (14). Another News Corporation subsidiary is IGN Entertainment, Inc., a digital media business that has a heavy social networking and video gaming presence with various partnerships across Asia and Europe (20). The Company also holds equity interests in companies like SkyNZ and NDS Group Limited, which was recently sold to Cisco Systems Inc. for approximately $5 billion. This vertical integration News Corporation exhibits through the acquisition of production, distribution, and online media companies creates a barrier for rival companies to distribute similar information and shows an increased amount of media coming from the same place, thus leading to a decrease in source diversity. The international spread of News Corp. across countries and the collaborations with local companies in those countries means increases in cooperation with foreign media groups, which it turn shows the Company's need for a maximum amount of control in an unsure market. All though there are more television channels and forms of news to choose from, there is an increased chance of information monopoly. The company owns subsidiaries in publishing across the world. News International, a publishing service that accounts for "one-third of all national newspapers sold in the United Kingdom," and News Limited, "the largest newspaper publisher in Australia by readership and circulation"(15). Dow Jones, another subsidiary, is described in the 10K as "a global provider of news and business information, with newspaper, newswire, website, mobile, newsletter, magazine, database, conference, radio and video businesses" (16). This broad description could symbolize News Corporation looking for alternative ways of distributing news in response to the decline of the common newspaper. Other News Corporation companies publish various books and free standing inserts. Risk Factors, Competition, Significant Changes Based on earned gross revenue during the past fiscal year, News Corporations top five competitors are probably Disney, Time Warner, Viacom, Bertelsmann, and CBS Corp. In terms of cable network programming, News Corp has companies in the US and abroad to compete with. For example, Fox News' main competition is CNN and MSNBC. Competition between film and television production companies is also high. MyNetworkTV and FOX Broadcasting Company compete with networks like CBS, NBC, and ABC for viewers and advertising revenues. A future risk factor for News Corporation channels is that "technological developments may affect competition within the television marketplace" (14). Many factors recently limited the SKY Italia direct satellite broadcasting including the limiting of programming contracts and prohibition from owning a DTT frequency under the European Commission. Traditional competition for News Corporation's publishing companies includes rival newspapers and magazines based on subscription fee and advertising price and demographic. The Dow Jones encounters competition from other print and digital platforms like the Financial Times and USA Today. Recently, circulation has been hard to maintain in the newspaper business due to increased access of news through other mediums like the internet. Harper Collins is finding more competition in the electronic book market from Apple and Barnes and Noble. Shifting customer preference from print to the web could signify a problem to News Corporation and lead to decreased revenues from its various publishing companies. Various government standards prevent subsidiaries of News Corp. from earning money. For example, recently the The Telecom Regulatory Authority of India limited "the amount of advertising time allowed on television channels" (24). FCC regulations in the US can also lead to fines when the substance being broadcast is deemed indecent or profane. Various risk factors for the Company's future include a decline in advertising based on the current economy, the introduction of new technologies that could cause changes in consumer behavior, illegal use of media by third parties, and the inability to predict what viewers will like in terms of television shows and movies. Another significant risk factor involves consumer faith in News Corporation after "allegations of phone hacking and payments to public officials" through its News of the World publication (1). Consumers may not want to use News Corporation companies if they no longer have faith in the legality of their products. The investigations are still ongoing and the cost to the Company because of these allegations remains unknown. Also, "the Company announced its intention to pursue the separation of its publishing and media and entertainment businesses into two distinct publicly traded companies," which will serve as a big change for News Corporation (35). The 10K constantly reiterates that this transition may not completed in the announced time of one year, that the separation is still uncertain, and that "these changes may not meet some stockholders’ investment strategies" (35).
