|
|
 | | | |
- close
- close
- close
- close
News Corporation (NWS) |
Suggest other news sources for this topic
WIKI ANALYSIS
News Corporation (NYSE:NWS) is a diversified broadcast and print media company whose subsidiaries include the Fox Broadcasting Company, Twentieth Century Fox, MySpace, SKY Italia, Dow Jones & Company, The Wall Street Journal and Barron's.
News Corp receives over a third of its revenues from advertising and, therefore, stands to lose significantly from a reduction in overall advertising spending, which is highly correlated with economic booms and recessions.[1] The company also receives nearly half of its revenues from outside the United States and this international exposure shielded the company from the full effects of the credit crunch and financial crisis.[2] Along with a host of smaller competitors, News Corp competes with a number of large media conglomerates like Time Warner, The Walt Disney Company, CBS and Viacom.
After the company acquired popular social network MySpace in 2005, MySpace lost its top ranking in social networking sites to Facebook. In March 2010, a rumor began circulating that MySpace's struggles have News Corp frantically trying to sell the site for approximately $700 million.[3]
Operating Segments
News Corp has 8 operating segments: (i) Filmed Entertainment; (ii) Television; (iii) Cable Network Programming; (iv) Direct Broadcast Satellite Television; (v) Magazines and Inserts; (vi) Newspapers and Information Services; (vii) Book Publishing; and (viii) Other. Of all these segments, Filmed Entertainment (20%), Cable Network Programming (18%) and Television (15%) contributes the most to its revenue. The company's smallest segments by revenue are Book Publishing and Magazines and Inserts.
Key Trends and Forces
Newspaper industry moving to mobile/digital content
The Wall Street Journal plans to make its mobile applications free to paid subscribers (of either the online or print WSJ) starting in October 2009. News Corp. previously planned on charging everyone to read WSJ articles on their phones, but had a change of heart, deciding only to charge those users who do not already have a paid subscription. With this decision, News Corp lowers the risk of upsetting and losing its existing customers, as well as expands to a new medium to attract further potential clientele, a move that benefits the company's overall business as it adapts to more modernized news mediums.[4]
Weakness in the Publishing Industry
The Print Publishing Industry publishing industry as a whole has been declining for the past few years. Circulation of magazines and newspapers is decreasing as consumers turn to alternative media sources such as the Internet, a cheaper and more convenient news source. Due to these decreases in circulation, advertising spending on newspapers and magazines has also shrunk, as have revenues from classifieds.[5] With the recent acquisition of Dow Jones (DJ), which publishes the Wall Street Journal, News Corp is increasing its exposure to the publishing industry. As a result of the deal, 26% of News Corp's revenues will come from publishing, partially tying the company's profitability to further industry developments.[6]
Declining movie attendance and DVD purchases
Movie Attendance has been declining for the past few years; price hikes designed to maintain revenues have only exacerbated the trend. With more convenient options such as DVDs or pirated movies online available to consumers, going out to the movies is losing its once-universal appeal. Studios have attempted to counteract the trend by focusing more on promoting DVD sales for their new releases, sometimes even releasing movies in the theaters and on DVD simultaneously. [7] However, this market, too, has matured quickly as DVDs reached full penetration in the United States.
Competition
News Corp as a whole competes with a number of large media conglomerates. However, each of the company's operating segments also compete with a variety of smaller companies focusing on 1 or 2 specific businesses.
- The Walt Disney Company (DIS): Disney's strategy centers on creating hit-animated motion pictures for children and then capitalizing on this content through its other businesses such as theme parks, toys and shows on the Disney Channel.
- Time Warner (TWX): As the largest U.S. media & entertainment conglomerate, Time Warner owns, among other properties, Time Warner Cable, Time Inc., Warner Brothers and HBO.
- CBS Corporation (CBS): Although CBS has operations in radio, outdoor advertising and print publishing, its biggest segment by far is television.
- Viacom (VIA): Spun off from CBS, Viacom operates in the film, television and digital media segments, and its brands include, among others, MTV Networks, BET Networks and Paramount Pictures.
References
- ↑ 2009 NWS Analyst Report, Morgan Stanley
- ↑ Geographic Segments, 2009 NWS 10-K Pg. 142
- ↑ Electronista: News Corp. rumored selling MySpace for $700 million
- ↑ Silicon Alley Insider: WSJ Changes Mind, Won't Charge All Subscribers To Use Mobile Apps
- ↑ News Corp 2007 10-K Item 7 Management's Discussion and Analysis p 47-48
- ↑ News Corp 2007 10-K Item 7 Management's Discussion and Analysis p 50
- ↑ Scott Bowles. "What, movies worry?" USA Today 03/20/2006
| |||||||
