Developing the US market

Entry into the satellite broadcasting is another big step for the News Corp. With the company continuing to expand and develop its traditional market areas, and the acquisition of the US book polishers Harper& Row and Triangle Publications, the Australian Herald and weekly Times (HWT), and the Twentieth Century Fox and six television stations from Metro media broadcasting group, It began the strategy of entering the satellite-broadcasting field.After the annual report which mentioned the satellite broadcasting strategy, the company took control of the satellite television plc(SATV), which distributed English-language television programming by satellite to cable systems in Europe. In 1988, Murdoch launched a four-channel sky service to be transmitted from a new satellite system called Astra. In the next year, the Sky television was started. In addition, in 1990, it merged with its rival the British satellite Broadcasting (BSB).

It is in accordance with the company’s expansion strategy.Murdoch described: “Our evolution from a single newspaper to a multi-media, multi-platform global media company reflects our adaptability and agility. ” Amid in 1983, in his annual report, Rupert Murdoch said that:” In the past years, we have given careful study to the Company’s options for the future, particularly in relation to the fast, emerging opportunities in electronic and satellite-assisted communications … ..

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“. And the satellite broadcasting has its own special features: the distribution of programs to more than one country, which accords with Murdoch’ expansion strategy finely.As to the feasibility, the firstly is the economic basis.

The company had become one of the world’s largest consortiums. However, the increased debt involved with the acquisition of Triangle Publications was of such magnitude that Rupert Murdoch was obliged to commit News Corporation to a significant debt reduction program following a little reported financial crisis in 1987 that the only way to overcome it was the guarantee of Murdoch by his private property; the secondly is the resources.The acquisition of Twentieth Century Fox and the restructuring of the US subsidiaries provided the opportunity for SATV to get entertainment and other information programming from the group. It is the core competence. The thirdly is the environmental factors of Feasibility. The personnel support is a critical factor. As for the staff involved, Murdoch had chosen to launch a multi-million pound venture with a handful of Australian TV cronies he had known for years – and not much else’ (Andrew Neil, Full Disclosure, 1996).To launch Sky TV, Murdoch brought in managerial talent from across News Corp.

Andrew Neil, editor of the Sunday Times, Gary Dave, a creative programmer from Fox, and Pat Mast Andres, who knew about selling advertising in a competitive environment, strengthened the team. Frothily, the customer acceptance is very important. The individual satellite receiving dishes were now available at a price and size that made the customers affordable and usable by the large number of households through Europe. For the strategy’s acceptability, in terms of risk, it is under great risks.At the time, Sky was operating from slum offices in Foley Street in London’s West End, the new Sky Broadcast centre in Isleworth still construction site.

Besides, the company was still in the debt crisis. As for the returns, It is not promising at the time. In the year to 30 June, 1990,134 million pounds had been invested, yet losses of nearly 10 million pounds per month were being incurred. The News Corporation reached to the US market in the 1980s, In 1984, a US-focused geographic and product shift begins in the company.In 1984, it purchased the Twentieth Century Fox and six television stations from Metro media broadcasting group, which made a foundation for the secondary developing. In 1995, its news papers and magazines still provided a majority of New Corp’s profits. The newspaper business in Australia and Great Britain were all in good condition. Moreover, the increasing profits came from the film and from television.

After years of competition, in 2003, Murdoch acquired 34 per cent of Hughes Electronics including DirecTV, America’s biggest satellite operation with more than 11 million viewers.Finally, he established a satellite foothold in the US market. The consistency of this strategy is quite in accord with the corporation’s expansion policy. “Indeed the economics of program production meant that the only way to create a world wide brand was to succeed first in the huge US market. It was the only way to achieve economics of scale. So the more that Murdoch expanded around the world the more he needed to make it in the United States. And here distribution was much more of a problem” (Chenoweth, N. , Virtual Murdoch, Vintage, 2001)The suitability of this strategy is result of the ambition and the opportunism of Murdoch.

He can always catch the strategic opportunities created by the unique and unanticipated events. He is an expansion-minded person. His political friendship brought him great influence. His acquisition of Times Newspaper attributes to his support for Margaret Thatcher’s 1979 general election in UK.

He is so clever a businessperson that he can always supports the winner who can help him later. That created him the capability of expansion.The acceptability of the strategy is positive. In terms of risk, it is relatively low. As Murdoch had lied a stable foundation for his expansion. In1980s the News Corp acquired the Twentieth Century Fox and six television stations from Metro media broadcasting group, which obtained many advantages over other now rivals.

these acquisitions supplied the company with access to studios for making films and television program, to a film library of more than 2,000 titles, and to a distribution platform for that content.That was the base of Fox Broadcasting Company, which with its affiliated local stations managed to establish in the late 1980s a fourth national television broadcaster in the US. In addition, this expansion into US has a great significance for the revenue increase. However, Rupert Murdoch had to be careful that his acquisition, and the debt association with them, should not against private bank loan agreement, which requires the borrowing amount of money no more than 10 percent of the net asset.

The feasibility for the strategy is generally fine.As to the environment, the US law prevented foreign citizens from holding more than 25 percent of any company with a broadcasting license. In 1985, Rupert Murdoch joined the US nationality, while News Corp itself remained an Australian company at that time, which made the way to expand clear. In the mid 1990s, when the News Corp decided to develop its US market, it had many rivals, such as the NBC, CBS, ABC, and the existing cable operators. At the time, other media consider programming as the resource to get a commercial success, while Murdoch focused on obtaining distribution channels.

He made a sports-led programming strategy. The feasibility of launching the sports channel is that the sport programs are inexpensive in cost, easy for producing and best viewed live. Therefore, it is easy to get customer acceptance – which lead to the increasing numbers of subscription. Further more, the Fox obtained the broad cast right to the national football Leagues’ NFC games and so on. In addition, it purchased some sports teams, such as LA Dodgers, Lakers and King Baseball teams.

The strategy of sports-led programming was Murdoch’s “battering ram”, as he had been demonstrated by BSkyB. After that, the News Corporation obtained many broadcast rights and did many purchases, such as the US local television stations and so on, to enlarge itself. Murdoch finally managed to establish a satellite foothold in the US by acquiring 34 percent of Hughs Electronics including Direct TV, which is America’s biggest satellite operation with over 11 million viewers. Those are the foundation of Murdoch’s global operation.