Academic journal article Global Media Journal

From Phone Hacking to the Splitting of Businesses in Times of Corporate Crisis: The Case of News Corporation

Academic journal article Global Media Journal

From Phone Hacking to the Splitting of Businesses in Times of Corporate Crisis: The Case of News Corporation

Article excerpt

Abstract

This article analyses the split of the former News Corporation into two new companies within a context of change in the media industry's market dynamics. The aim of this paper is to demonstrate that the phone hacking scandal in the News of the World, formerly one of News Corporation's best-selling tabloid newspapers in the United Kingdom, should be interpreted as a problem that Rupert Murdoch managed to address despite the toll that the case had taken on the company. Moreover, rather than a cause of the subsequent split, it should be understood as a means of halting the company's BSkyB takeover bid. This crisis gave the conglomerate the opportunity to make changes to its global strategy by specialising in market niches through two new brands: 21st Century Fox and the new News Corporation.

Keywords: Media conglomerate, News Corporation, Phone hacking, BSkyB, Murdoch, 21st Century Fox

Introduction

Several books were published about News Corporation (also known as "News Corp") in the United Kingdom between 2012 and 2013 following the well-known phone hacking case, which highlighted the illegal methods used by News of the World journalists to get hold of information about celebrities, politicians and victims of scabrous events. In all of those books, the authors are steadfast in their claims that the Sunday newspaper scandal has had a negative impact on the recent history of Murdoch's company. For example, John Lisners (2012) maintains that Murdoch's reputation (and his family's) has been seriously affected since the News of the World case. In his own words, Lisners considers that "politicians will in future be very careful about getting too close to Rupert Murdoch" (Lisners 2012, 270). On his part, David McKnight asserts that one of the most serious outcomes of the case was the former News Corporation's split into two separate businesses (McKnight 2013, 212). The same theory is espoused in the book Dial M for Murdoch (Watson & Hickman 2012), which we consider more interesting. The book's authors go a step further and claim that the phone hacking scandal actually broke the former News Corporation into two (Watson & Hickman 2012, 266).In this article, however, I am going to try to demonstrate that these considerations offer a reductionist view of News Corporation's global dimension. While the importance of the controversy surrounding the News of the World case cannot be denied, and which led to the newspaper's closure several weeks later, I would argue that Murdoch's empire and its media influence have not been undermined. Eve though Murdoch's company may have suffered some kind of momentary attrition, I consider it crucial to take into account other issues of an economic and entrepreneurial nature in order to establish what actually happened within the company and why the split into two new businesses took place. It should not be forgotten that, while it has a big market share in the United Kingdom, News Corporation's biggest centre of business is the United States and its influence is global (Fitzgerald 2012, 368; Warf 2007, 96-98). The hypothesis will therefore focus on demonstrating that the news controversy that ended in the tabloid's closure was actually a means of halting News Corporation's BSkyB takeover bid, an operation that combined elements of a political and media-business nature in the United Kingdom. One year after these events, and albeit not the only direct consequence of them, News Corporation split into two large areas. Viacom and CBS had set precedents for this in 2006. To understand the full extent of News Corporation's new way of operating in the global market, I have to contextualise the new survival and growth strategies of conglomerates, which, in order to retain their global influence, have sought formulas that offer greater operational and financial flexibility.Taking all of these issues into account, my arguments will be base on the following premises in order to demonstrate my hypothesis:

· Changes in big global groups' market dynamics. …

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