Fact Summary By 2003, Rupert Murdoch and his team had built an impressive global sports regime within News Corp., while transforming the industry with innovative strategies, implementation, and technologies. Murdoch had used FOX's acquisition of the National Football League (NFL) rights in 1993 to launch an attack on the entrenched Big Three broadcasters--CBS, ABC, and NBC. On the cable side of the business, FOX had identified a gap in the market where unbranded and ungrouped regional sports networks aired local team games. FOX believed in the increasing regional emphasis of America and set out to bring the regional networks together. Despite these successful moves, Murdoch was aware of the ever-changing nature of the sports industry and knew that many key decisions lay ahead. Strengths Internal Fox Entertainment is an integrated entertainment company engaged in the development, production and worldwide distribution of feature films and television programs. It is also involved in television broadcasting and cable network programming. Fox Entertainment acquired DirecTV (earlier Hughes), in 2003, which helped it to vertically integrate its business. Fox Entertainment enjoys a position of power in every level of the entertainment industry. Due to a high number of subsidiaries, the company has a strong foothold in every facet of the entertainment business. Vertical integration helps the company to generate better profit margins. Fox Entertainment, a subsidiary of News Corporation, is one of the largest entertainment conglomerates in the world. The company has four business segments and all these hold leading positions in their respective business. Entertainment is one of the world’s largest producers and distributors of motion pictures. The company also owns and operates television stations in nine of the top 10 US markets, such as New York, Los Angeles and Chicago. Fox Sports Net is one of the largest Regional Sports Network (RSN) programmers in the US with stakes in 19 RSNs. As one of the leading players in the entertainment market, the company is able to leverage its brand when launching new shows and programs. External Being a globally and internationally recognized media industry, The News Corporation (TNC), it can be said that the company held a strategic position in the media market. Based on the given case, it is stated that when TNC streamlined and reincorporation in 2003-2006, they already gain advantage in terms of size and market niche. With the multibillion income and sales, TNC has outgrown their major rival companies to be the largest firm in this market. In addition, the decision of the management to diversify and the consideration of committing to satellite broadcasting and its acquisition of the MySpace.com, the company has been able to enhance more its strategic proposition and developed a brand which is difficult for other rival companies to outgrow. Likewise, the firm has been characterized by different analysts to be capable of adapting to changing market needs so as to maximize their profit. Their ability to listen and identify the needs of their target market has permitted TNC to create something that is recognized by their loyal and satisfied clients. Another strengths of TNC is their ability to continuously reinvent and enhance their service in line with the internet, media and

communication while efficiently managing the needs of their customers which enables them to maintain leader status in the competitive market. Weaknesses Internal The News Corporation (TNC) has had a poor management structure of the company which is very informal and emotionally influenced. The management control of Murdoch may have negative effect on the company. The inability of the management to compliment as Murdoch does not consider the interests of the shareholders. This has caused financial issues because of the breach of the private bank loan contract and agreement. Another issue is the inability to use strategic planning for company operations. The decreasing market share is mainly because to the existence of substitute industries like Virgin. The management’s poor recognition of the broadband internet technology has been another weakness, which may have lead to high investment risks and costs. Also poor management of the information technology could have lead to mismanaging important documents and insecurity of such information. TNC is focusing too much on the high-end acquisition and diversification despite of the risky impact of their decisions. External Fox Entertainment’s are down 6% year-on-year in total viewers and 8% year-on-year in the key adults’ category 18-49 year olds. The company’s ratings trouble result from too few successful scripted shows and an over-reliance on reality programming. A prime example is its dependence on American Idol to drive higher ratings. The performance of the network's other reality programs has been very disappointing. This reliance on the reality format is a major weakness which must be addressed or the company risks losing viewers to other networks in search of scripted shows. Opportunities The basis for the long-term success of the TNC is their ability to continuously develop new generations of more advanced media services. Hence, one of the TNC’s opportunities is their chance to tap into more markets as the output of their innovations being provided in the television, media, and internet industry. The most important transformation would be from the conventional terrestrial system of TV distribution in competition with cable system and satellite, to the adoption of digitalization as well as the recognition of the importance of the internet. The coverage of the Iraq War from 2003 would be a great example to make the company recognized in the market. TNC could have many new subscribers because of the exclusive rights to Broadcast of English football Premier League. The chance of developing single-language media in the US market could lead to larger audience appeal. They would then have the option to control satellite programming through their decoding technology as their response to the law passed by China. Another opportunity is that of modifying the broadcast content to meet the demands of the Asian market. Also achieving market development because of the acquisition of Turner South, TNC could attain market and product development. Acquiring two other newspaper groups would give TNC to increase their market share (market penetration). The opportunity to have a strategic alliance with China Mobile, to develop innovative media products and services/ Continuous global market expansion takes advantage and generates new markets to increase its profit, specifically, with the developing countries. TNC has also the chance to enter new growth markets because of their acquisition of Myspace.com. They also have the opportunity to get ahead of their competitors.

Broadcast signals are currently received by the viewing public in analog form. The FCC and Congress have adopted substantial measures in recent years to regulate the entertainment industry. It is expected that the Congress will pass legislations to mandate the television stations to broadcast exclusively in digital form by 2009. Digital television is likely to bring with it opportunities for interactive television, television shopping and other activities. Fox Broadcasting Company launched a new digital broadcast system co-designed with IBM, that would help transform high definition (HD) broadcast production, in 2005. This presents a significant opportunity for the company to increase viewership and advertising revenues. Threats Fox Sports and News Corporation operate in the highly competitive, consumer-driven and rapidly changing media and entertainment industry. The company is to a large extent dependent on the ability to acquire, develop, adopt, and exploit new technologies to distinguish its products and services from those of its competitors. In addition, the company may face legal and practical limitations on its ability to its intellectual property rights as a result of technological developments that facilitate the theft and unlawful distribution of the company’s copyrighted works in digital form, including piracy via the internet. It may also be adversely affected by the failure to choose technologies appropriately; by the failure of new equipment, such as digital settop boxes or digital video recorders, or by the ability of new services, such as digital cable, highspeed data services, to appeal to enough consumers. Fox operates in a highly competitive market which has large programming rivals, such as NBC, ABC, CBS and UPN networks. Moreover, competitors, such as ABC, CBS and NBC have a higher number of affiliates with VHF signals than Fox, and claim to have better reach to their respective markets. Competition could affect the company’s advertising revenues, as advertisers prefer networks with a higher number of affiliates. Furthermore, the company will also have to compete for the acquisition of the broadcasting rights to major events, impairing its margins in the process. Piracy of programming is increasing due to technological advances allowing conversion of programming and other content into digital formats. This facilitates the creation, transmission and sharing of high quality unauthorized copies of Fox’s content. The proliferation of unauthorized copies and piracy of these products has an adverse effect on the company’s businesses and profitability as these products reduce the revenue that the company could potentially receive from the legitimate sale and distribution of its products and services. Increasing piracy may have an adverse effect on the company’s businesses and profitability. Conclusions TNC is in line with their ability to change ad adjust the business into an industry which give the latest and innovations in the media corporations. TNC objective is to establish a business empire which is united, creative and logical and to create a corporation that utilizes strategic opportunities as they arrive, with the aim of anticipating challenges brought by the changing environment. The precise business model for sustained profitability from their digital investments is still uncertain at this point. Consequently, in some ways, they are embarking on a period of trial and error. But they are confident that, as the most innovative and fearless media company in the world today, they can devise a model that delivers a first class digital experience for their customers and significant revenues for their company. To the casual observer, News Corporation’s entry into digital media may seem to be a departure from their past business models and practices. But in truth there is fundamental continuity to their approach. They have always sought new markets and new avenues for distribution. Their company launched Australia’s first national paper and America’s first new television network in 40 years. They

helped pioneer the TV DVD market. They upended a decade-and-a-half of received wisdom about what works in the cable news market. Now they are bringing that same innovative, entrepreneurial spirit to the Internet.