The corporate history of Rupert Murdoch’s News Corporation

June 30, 2014

The entities formally known as News Corporation provide some of the most blatant and fascinating examples of corporate history affecting news operations.

Rupert Murdoch

Rupert Murdoch has effectively controlled News Corporation since founding the global media holding in 1979. Photo by David Shankbone/CC BY.

From its inception as News Limited in Australia, to its 2012 split into current companies News Corp and Twenty-First Century Fox, and even to News Corporation’s ongoing lawsuits in England, News Corporation’s operations have always been tied to its founder Rupert Murdoch.

In discussing the effects of News Corporation’s history on its journalistic output, I intend to explore the founding of the company; its history of mergers, acquisitions and major investments; examples of the company’s news and political agendas; current and previous earnings; and a discussion of the company’s adaptation to online news. Although I will track aspects of the company’s financial history, I intend to focus on more recent changes in revenue.

The origins of News Corporation can be traced to Murdoch’s inheritance of his family-controlled, publicly-traded Australian media corporation News Limited in 1954, following his father Keith Murdoch’s death in 1952. The Murdoch family then controlled only a few city-based newspapers, notably Adelaide’s The News, which Rupert took over as publisher.

Having at this point studied at Oxford and worked as an apprentice in London’s Daily Express, Murdoch revamped The News into what Bio calls a “chronicle of crime, sex and scandal, and started a newspaper war with competitor Adelaide Advertiser.

It is worth noting that Murdoch soon started to control other types of media on top of his newspapers; in 1958 control of one of Adelaide’s two network licences at the time, Channel 9, was awarded to Southern Television Corporation, 60 percent of which News Limited controlled.

Murdoch continued to increase the company’s assets by buying existing papers, such as Sydney’s The Daily Mirror in 1960 and, significantly, creating Australia’s first nation-wide newspaper The Australian in 1964. According to media historian Rodney Tiffen, establishing The Australian was an economic risk for Murdoch as it, “was not clear that enough national advertising existed to sustain [such] a newspaper” and its base in Canberra made it extra-costly, as plates had to be flown to Melbourne and Sydney for further printings.

But Murdoch’s ambition kept the paper alive, and while there is still ongoing debate over The Australian’s profitability, the paper reportedly operated at a loss of “A$30 million over the course of [its first] 20 years”. The decision to base the paper in Canberra, the nation’s capital, was meant to draw in the city’s “younger, better-educated generation of political journalists”, and resulted in a boom of quality political journalism throughout the reign of conservative Prime Minister Robert Menzies and his support of the Vietnam War.

Murdoch continued his mass expansion overseas by purchasing UK tabloids, namely the popular News of the World in 1968 and the struggling Sun in 1969. NOTW had always been profitable and Murdoch struggled to acquire it, competing with his Czechoslovakian-born English equivalent Robert Maxwell.

Murdoch’s proficiency for driving sales and sensationalism is best exemplified in his expansion of The Sun; debuting as a standard daily to an impressive circulation of roughly three million in 1964, The Sun quickly lost most of these readers and was never profitable under its original owners.

Murdoch turned this around with his then-signature focus on sensationalism, or what CNN’s Bryony Jones calls Murdoch’s emphasis on “sex, sports and crime”. Merging The Sun’s operations and style with NOTW’s, Murdoch increased circulation to as much as two million in 1973 and three million in 1974; The Sun continues to be relatively popular with a circulation of 2,409,811 in January 2013, a 12.4% drop from 2012.

While not immediately tied to News Corporation’s evolution, it is worth noting that after Murdoch’s British ventures he increased the conservative agendas of his Australian newspapers, mounting an anti-ALP campaign throughout the early 1970s and dismissing The Australian editor Adrian Deamer after Deamer criticised Prime Minister William McMahon in a controversial, anti-apartheid editorial concerning the Springbok’s 1971 rugby union tour.

"News Corp" by Gerard Flynn

News Corporation’s New York headquarters, as seen during Occupy Wall Street 2011. Photo by Gerard Flynn/CC BY.

Murdoch’s expansion into the US began with three Texas papers in 1973, including the tabloid San Antonio News, and the New York Post in 1976. San Antonio would become infamous for its sensational but inaccurate headline “Killer Bees Move North” in 1976, while Murdoch’s personal operations of the Post resulted in a rise of circulation, notably when a focus on the “Son of Sam” murders of 1977 “culminated in the misleading headline ‘How I Became a Mass Killer’ over a selection of old and innocuous letters from the murderer to a girlfriend”.

In 1979 Murdoch officially established News Corporation as the global media holding for News Limited, which operated as the Australian-based subsidiary, and his other media holdings. Through News Corporation, Murdoch’s reach further expanded into other kinds of media, notably purchasing satellite television companies UK’s Satellite Television PLC and USA’s Inter-American Satellite Television Network in 1983, film and television production company 20th Century Fox in 1985, and a combination of literary publications throughout England and USA, which were amalgamated into HarperCollins in 1990.

The acquisition of Fox proved to be another example of Murdoch’s dedication to expanding News Corporation’s reach, as it required him to become an American citizen. The push for film and television production, not limited to Fox but certainly based around it, would become the dominant form of revenue for News Corporation; in its final year as a unified company, 2012, its cable network programming, filmed entertainment, television and direct broadcast satellite television divisions made up 74% of its consolidated revenue, compared to publishing’s 24%.

The early 1990s demonstrated the economic fallout of News Corporation’s relentless expansion, as Murdoch was forced to restructure the company in 1990 to avoid insolvency. From February 1991 and February 1992, Murdoch sold roughly $800 million worth of businesses, including a number of American magazines.  Additionally, his “equity in News Corporation was reduced to about 30 percent, thereby reducing his volatile influence on the company but retaining his marketing savvy”.

News Corporation continued to expand, however, buying controlling shares in or flat-out purchasing institutions such as the broadcasting rights to England’s Premier League in 1992, Asian satellite broadcaster Star Television in 1993, the LA Dodgers baseball team in 1997, and ten American TV stations in 2000.

News of the World closed in  2011 following a phone-hacking controversy. Photo by Gene Hunt.

News of the World closed in 2011 following a phone-hacking controversy. Photo by Gene Hunt/CC BY.

In 2005, News Corporation bought social-media site Myspace for $580 million, which they would then sell to Specific Media in 2011. That same year Murdoch admitted that, despite investments in online companies throughout the 1990s, he “didn’t do as much as [he] should have” to adapt for the emerging digital age” and that newspapers had been complicit in their resulting fall in circulation. At that point The Sun had still managed to create one of the top ten sites in England.

2005 also saw News of the World’s publish a story concerning Prince Williams’ knee injury, sparking an investigation into the paper’s history of phone hacking. This also resulted in the arrest of both royal editor Clive Goodman and private investigator Glenn Mulcaire in 2007, and, following a similar phone-hacking controversy in which Rupert Murdoch was forced to testify, the paper’s closure in 2011.

As mentioned, Murdoch’s influence on his media outlets not only stretched to increasing the sensational attitude of his newspapers, but pushing political agendas. Notably, his control of Fox paved the way for the creation of 24-hour news channel Fox News in 1996, which has since became known for its outwardly conservative agendas. For example, News Corporation donated $1 million to the Republican Governors Association in 2011, and Fox News has become synonymous with conservative commentators, such as Bill O’Reilly and Glenn Beck.

In 2012, and reportedly in part due to the NOTW lawsuits, News Corporation announced its separation into companies News Corp and Twenty-First Century Fox, which would separate the publishing and media/entertainment subsidiaries respectively. In its final annual report, News Corporation listed revenue as $33,706 million, a 1% increase from 2011’s $33,405 million. Importantly, the majority of both the revenue itself and the rate of increase was due to the company’s media/entertainment subsidiaries.

Twenty-First Century Fox, both in its current and previous incarnations, has consistently increased in revenue. In its first annual report as a separate entity, it listed $50,944 million worth of assets, including the Fox network, and an increase in revenue from $22,044 million in 2009 to $27,675 million in 2013.

Unsurprisingly, the ‘new’ News Corp’s current and previous publishing companies, including News Corp Australia and HarperCollins, have considerably fewer assets; currently totalling $15,643 million, the company faces the current publishing climate with relatively fewer streams of revenue than Twenty-First Century, including advertising, newspaper sales and book sales. News Corp still listed an increase in revenue from 2009-2013, but only slightly, from $8,338 million to $8,891 million.

Murdoch, it must be emphasized, effectively controls both companies, remaining CEO, chairman and owner of a controlling 39.4% of Class B voting shares of Twenty-First Century Fox and executive chairman of News Corp. However he is not without opposition; in October 2013 a group of TCF shareholders, headed by Christian Brothers Investment Services, created a proposition to split his roles of CEO and chairman. They decisively failed, obtaining only 147 million votes in favour with 362 million votes against.

2014 has only emphasised Murdoch’s role within Twenty-First Century Fox, with his sons Lachlan and James Murdoch announced as Co-Chairman and Co-Chief Operations Officer of the company, respectively, on March 26th. News Corp meanwhile looks ready to expand its Australian holdings, with the country’s conservative government seeking to water down the country’s media-ownership rules. This reform would potentially consolidate News Corp’s control of the Ten Network, which has been limited by Australia’s “two out of three” forms of media licensing rule.

Bibliography

Photos used under Creative Commons licences

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