News Corporation is the world’s second largest media conglomerate founded by Chairman and CEO Rupert Murdoch. The company conducts business worldwide with operations primarily in the United States, the United Kingdom, Continental Europe, Australia, Asia and Latin America. News Corp has operations in eight industry segments which are filmed entertainment, television, cable network programming, direct broadcast satellite television, integrated marketing services, newspapers and information services, book publishing, and other assets (News Corporation 2009). News Corp’s competitive strategy in creating economic value lies in its ability to acquire new media assets through the steady revenue generated by its already well-established newspaper, television, and movie industries. Murdoch created News Corp in 1979 as a holding company for News Limited, which was Murdoch’s original business interest in Australia before becoming part of News Corp during the growth of his media empire. News Corp’s growth and success can be analyzed using the Balanced Scorecard’s four perspectives; financial, customer, internal processes, and learning and growth. Because News Corp is a publically traded company, its main goal is to increase the company’s profitability to provide shareholders with greater returns. According to News Corp’s 2009 annual report, revenues were down for the year. Murdoch addresses these losses in a letter at the beginning of the report reassuring shareholders that the recession is impacting all industries and that News Corp has taken steps to better their future financial performance (News Corporation 2009). News Corp uses various financial measures to signal to shareholders information on its current financial standing by releasing information such as its annual revenues, stock price, return on assets (ROA), and return on investments (ROI). Part of News Corp’s financial appeal to shareholders is the company’s diverse media industry portfolio, making it unlikely that the company would sustain any long periods of loss because of its multiple operations. News Corp’s goal of increasing financial performance is accomplished by satisfying its customer’s needs. Murdoch has taken measures to ensure that News Corp remains competitive in its different media companies to satisfy growing customer demands. News Corp’s successful operations in the newspaper and magazine industries resulted in expansion from Australia to other countries including the U.S., where it acquired successful newspapers such as the Wall Street Journal and the New York Post to further establish its media presence (Corporate Watch 2004). News Corp is successful due to the wide range of media that it offers, ensuring that every customer segment is reached by its diverse offerings. News Corp began in the newspaper and magazine industries, though the sustained success of these ventures allowed the company to expand into other media markets using the revenues provided by these cash cows. Whether customers know it or not, many of the media outlets that they read and watch every day are owned by News Corp and were developed or acquired specifically to meet their needs. Thus, News Corp’s goal of maximizing its number of customers is achieved by offering a variety of media outlets in its eight different operating segments. News Corp media reaches a wide range of customers due to its strong internal processes. Murdoch is responsible for News Corp’s growth through successful acquisition and management of its media industry assets, transforming the company into the large media conglomerate that it is today. The growth is due to the company’s internal processes strategy starting with Murdoch. CEO and founder Rupert Murdoch is one of the company’s most valuable assets. Murdoch’s dynamic leadership and willingness to take risks contributed towards News Corp’s continual growth and expansion into the newest media industries. Murdoch states in the company’s 2009 annual report that News Corp’s “great[est] strength has always been getting ahead of change” and that that it is “always looking for ways to improve [its] quality and expand [its] presence” (News Corporation 2009). News Corp’s proactive strategy toward approaching change and growth is responsible for its success. News Corp’s operational processes include its ability to effectively manage the large number of assets that it owns. The company excels at deciding what new media entities to acquire and how to manage the new acquisitions. News Corp’s initial strategy for growth was to purchase companies close to failing and turning it around using effective management to increase its profitability. Recently, the company’s strategy has been to purchase companies that are successful in their respective outlet to expand News Corp’s presence in these new operations. Effective management is especially crucial to keep such different segments successful because of the knowledge and experience that is needed to know what industries to enter and leave. The company has been able to streamline its operations by reducing unprofitable assets and replacing them with more profitable ones. Managing the company’s many assets is a difficult task, though News Corp has been successful through its continual review process to determine if current investments are the most appropriate in order to grow the company toward current media trends. Finally, learning and growth plays an important role in expanding the company and increasing shareholder value. Murdoch was an Australian citizen who moved to the U.S. to buy Fox, gaining residency to satisfy the law that only U.S. citizens could own American television stations (Corporate Watch 2004). The proactive measures taken by the company shows its willingness to enter new industries to lead to increased profits. News Corp has grown over the years to its empire status due to initiatives taken by management to ensure that the company is at the forefront of new media. Murdoch wanted to expand the company’s businesses into the U.S. and its television industries knowing the large market potential. As a result, acquisition of Fox broadcasting turned out to be one of News Corp’s most profitable revenue streams. News Corp has taken different risks to ensure company growth using information learned through research into current media trends and potential assets that contribute toward its success. News Corp uses its human capital, such as Murdoch’s experiences, toward research and management to improve its information capital and help build the company. For example, News Corp recognized the growing importance of internet media and acquired myspace.com in 2005 along with other various online assets to increase its presence in online media markets. Recognizing that the digital world is where media is trending, News Corp created a new position in the company (chief digital officer) to address this market and to strategize how News Corp will fit in. Learning and growth plays a crucial role in News Corp’s success. The intangibles that the company own including experienced management and reputation as well as the steady revenues provided by its financial assets allow News Corp to continue to grow as a media conglomerate. News Corp’s strategy can also be analyzed using SWOT analysis. The company’s strengths lie in several different areas. Murdoch’s unique leadership ability has been critical in guiding the company toward new directions and successful expansion into new markets. The combination of existing cash cows and human capital has contributed toward News Corp’s success through diverse media offerings and a strong global presence. The ability to recognize new growth industries is crucial to the company’s success. The company has been doing a good job entering and establishing itself in emerging media markets. While management is one of the company’s greatest strengths, the management structure also contributes toward the company’s weaknesses. News Corp is a family owned media empire. Because Murdoch appoints leadership positions to family including his children and latest wife, a conflict of interest exists between what’s best for the company and satisfying family members by giving them executive positions, regardless of whether they are most qualified. There have also been recent criticisms regarding News Corp’s acquisition strategy stating that its strong focus on entering the digital market has led to neglecting some of its failing operations in other segments such as the newspaper and television divisions (Paid Content 2009). Opportunities for the company exist in further global expansion and in the continually expanding digital media market, which includes paid online content and social networking sites. News Corp faces both internal and external threats. Internal threats include poor decisions by family in managements as well as neglecting older, established industries in favor of newer growing ones. External threats include the economic downturn affecting all industries and stiff competition from the Disney and Viacom media conglomerates. Overall, the company’s proactive strategy contributes toward its growth and success as one of the world’s largest media providers.
Another vital component of News Corporation (NWSA) is to improve their balance sheet. This is a financial measure with attributes that include the net income, and changes in amount of assets and liabilities. News Corporation has had a rough year with the economic downturn and generated negative revenue. However, News Corporation has not lost much in terms of worth, it still owns all the infrastructure and companies as it has before the recession. In fact News Corporation only generated negative revenues due to impairment charges filed in the 4th quarter against Fox Media, the charges totaled in 8.896 Billion dollars ((News Corporation 2009). If the charges had not occurred, then News Corporation would be maintaining constant growth. Between 2007 and 2008, NWSA increased it’s net income by 1.961 Billion dollars (News Corporation 2009). Also they have continued to grow because News Corporation has increased its Programming rights of 2.645 Billion in 2008 to 3.038 Billion in 2009 and increased its inventory by 336 Million between the two years (News Corporation 2009).
Other financial performance measures include Return on Asset, Return on Equity, and Bond scores. In 2009 News Corporation’s Return on Assets was -.0636 and Return on Equity was -.1455, based on the Balance sheet (News Corporation 2009). Based on Trailing Twelve Months analysis from Reuters, News Corporation has ROA of 6.44 , ROI of 8.05, and ROE of 15.09. All these management effectiveness figures are beating the industry average of 5.79, 8.05, and 13.55 (“Reuters”). The reason the ROA and ROE were low in 2009 was due to the impairment charges that occurred, otherwise NWSA would be generating positive revenues and maintaining its solid performance year after year. New Corporation also has maintained above average Bond ratings of Baa+ and demonstrated Stable performance from Moody’s. To continue to show that News Corporation is still a strong company, the company announced dividends of .12 cents per share in 2009 (News Corporation 2009).

-------------------------------------------------

SOURCES

News Corporation, Annual report for fiscal 2009. News Corporation website: http://www.newscorp.com/, 2009

(News Corporation 2009)

Paid Content Organization, Analyst calls out Murdoch over ‘Lack of Strategy’; Downgrades News Corp to Sell. Paid Content website: http://paidcontent.org/article/419-analyst-calls-out-murdoch-over-lack-of-strategy-downgrades-nws-for-fift/, 2009

(Paid Content 2009)

Corporate Watch Organization, News Corporation: A Corporate Profile, Corporate Watch website: http://www.corporatewatch.org/?lid=357, 2004

(Corporate Watch 2004)

"Financials: News Corporation." Reuters. Thomson Reuters, 30 Apr 2010. Web. 1 May 2010. <http://www.reuters.com/finance/stocks/financialHighlights?symbol=NWSA.O>.
(“Reuters”)