What’s on the News Corp Radar?

With the news that the Key Note address at Ad-Tech came out in support for Rupert Murdoch’s position on paid content for online I thought it would be a good time to take a quick look at what was on the MobCon Radar for News Corp.

If you haven’t seen the Radar before then let me explain.

The MobCon Radar maps the major investment and product development activity undertaken by News Corp since the end of the dotcom boom. It allows us to see what shape News Corp’s convergence strategy is in and if what they have tried in the past will help them to be more profitable in the future.

It also allows us to quickly compare their convergence strategy with other mobcon market leaders (e.g Microsoft, AOL, Yahoo and IAC, New York Times).

So what’s on the News Corp. Radar?

Just like Times Warner/AOL, News Corp is a global multimedia conglomerate and just like most other global multimedia conglomerates Newscorp has struggled since 2000 to deliver sustainable gains in shareholder value.

News Corp vs Times Warner/AOL % change in Share Price 2000-09

The Radar shows us that News Corp has applied one of the narrowest MobCon strategies across the MobCon landscape. 15 years after the birth of the Information SuperHighway News Corp is still essentially a traditional media company.

Apart from the acquisition of the social networking platform MySpace, in 2005, the primary focus of the company has been on acquiring traditional media assets like newspapers (e.g Wall St Journal) or developing traditional media products (e.g. Sky TV). 

What's on the MobCon Radar for News Corp?

As I explained in Who holds the key to MobCon profitability? media conglomerates are the industry sector at most risk in the first wave of the MobCon. Next will be the Software Industry followed by Telecoms and Banking.

News Corp does not have an integrated MobCon strategy and this is reflected in the revenue structure of the group. In 2008 their online division delivered just under 5% of the group wide revenues.

Fox Interactive Media, who also operates the MySpace Social Network Platform, delivered roughly 3.5% of the group. News Corp’s online Newspapers delivered a mere 1.5%.

This result is probably one of the key drivers for Rupert Murdoch’s recent announcement on the need for Newspaper Industry to develop a strategy that will make audiences pay for online content.

The real question is: Will the Murdoch Pay Per View strategy work or is it time for the Newspaper Moguls to reconsider their MobCon strategy?

Polling conducted earlier this year by Nielsen indicates that the leading online newspaper in the USA (NY Times) sits in overall 5th place as a provider of online news. The market leaders are the web’s mega-portals: MSN, CNN, Yahoo and AOL.

Today, as Nieman Journalism Lab’s Martin Langeveld explains in a post on the online newspaper audience, online Newspapers represent less than one percent of total U.S. page views.

All of which means US Newspapers are regional Print powerhouses but online they are virtually irrelevant.

The question really isn’t about will they pay? It’s will they bother turning up and if they do will they stick around?

Newspapers, like most of the industrial American heartland, are facing the full impact of globalisation. They have discovered that their localised news and advertising distribution business model is obsolete when you are competing with global online news providers. 

But it is not all bad news. As Martin Langeveld explains in his post Print is still king: Only 3 percent of newspaper reading happens online. So perhaps Print is the future of Newspapers after all?

This however will not address the long-term problem of falling advertising revenues. See If you think the internet is responsible for the decline in newspapers you are wrong  and Farewell to the Ribbons of Gold for more details.

Probably more interesting than the “Death of the Newspaper” back story at News Corp is the MySpace story.

MySpace was purchased for $580 Million by Fox Interactive Media in July 2005. (See BusinessWeek’s News Corp.’s Place in MySpace). It was to be the cornerstone of News Corp’s next generation MobCon strategy.

Four years on the strategy looks to be in trouble. (See Mashable’s MySpace Helps News Corp Lose $363 Million). News Corp is struggling to find ways of monetizing the site and the once undisputed market leader of the social networks is rapidly losing market share to the newer and more agile competitors in Facebook and Twitter (See PC World’s News Corp.’s Jon Miller: MySpace Stopped Innovating).

At the moment it is the cable and satellite TV assets that are the cash cows of the News Corp portfolio. But even here there are storm clouds on the horizon. Business Insider’s Henry Blodget pretty much said it all earlier this year in his post Sorry, there’s no way to save the TV Business.

One suspects that the strategy News Corp has pursued over the past 15 years has been more about acquiring political and market influence than acquiring commercial marketplaces (i.e. Classifieds and Display Advertising). This strategy pretty much blindsided News Corp to the future of classified advertising being eBay and Craigslist as opposed to print and online advertising/content bundles.

15 years ago News Corp did not foresee that the future of the classified did not need content to generate the traffic for the market hub.

Even 5 years ago it was clear that the commercial synergies with an eBay or a Craigslist held more potential for News Corp than those of MySpace.

The good news for News Corp is the MobCon convergence is not a single wave but a series of waves. So, although it now looks like News Corp has pretty much missed out on the first wave (Web 1.0/2.0),  it can catch and profit from the next wave (The Mobile Web).

Perhaps it will have to park its paid per view content aspirations for a while and start investing in the future distribution platform(s). Perhaps a joint venture with Nokia or Blackberry may be a more natural fit than another MySpace?

The real question is does News Corp have the market smarts to dominate the rest of the MobCon landscape if, and when,  it chooses to compete in the other key segments of the MobCon Radar?