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Questions case study 4: News Corporation
1. What is the extent and type of diversity undertaken by NewsCorp? NewsCorp started with a local newspaper in Australia but was soon the owner of the only national newspaper of Australia and over 20 local newspapers. It had enough profitability to expand to the UK, where it acquired more publishers. In 1984 NewsCorp also moved to the US and made the first major product shift by acquiring film company and several television programs. Five years later Newscorp launched a satellite broadcasting network in the UK, named Sky Television. It merged with BSB but Sky Television dominated the new company and in 1992 it launched a sports channel. In 1996 NewsCorp introduced the Fox News Channel in the US. Also it moved into Asia with the acquisition of the satellite company STAR TV. In 2005 made a first step into the online media by buying the social networking site myspace.com and BSkyB also offers broadband. Related diversification: Newscorp has adopted a vertical integration strategy by for example making programs and also distributing them. Also it has a horizontal integration strategy because it has many products that are complementary, for example Fox News and sports channel. Unrelated diversification: Newscorp moved into an underdeveloped market in Asia.
2. What is the logic of the mix of business in Newscorps portfolio? NewsCorps has a balanced portfolio of stars, question marks, cash cows and (unfortunately) also a dog: Stars: The star of NewCorps is the recent movement into the online market. It is expected to be the fastest growing market with a lot of opportunities. Question mark: STAR TV in Asia is a question mark because the potential market growth is high but the market share is still low. Cash cow: The sports channel of Newscorp is a cash cow. It is a very profitable product and will most likely continue to be so. Dog:...