UPDATED 10:00 EDT / JUNE 29 2012

A Look Back at News Corp.’s Biggest Blunders as Company Splits

News Corporation, the media group owned by Rupert Murdoch, shaken by the scandal of illegal phone tapping of some of the British personalities, announced in a brief statement that the company will split into two separate companies.

News Corp. explained one of the public companies will take care of the television and film business such as 20th Century Fox, the Fox broadcasting network and News Corp’s stake in BSkyB, while the other will handle various publication houses including CNNMoney, The Wall Street Journal, The Times, The Sunday Times, The Sun, The Australian, Dow Jones newswire, publisher HarperCollins and The New York Post.

“The proposed transaction would create global category leaders in both publishing and entertainment: a publishing company, which would be comprised of News Corporation’s newspapers and information businesses in the U.S., U.K., and Australia, the Company’s leading book publishing brands, its integrated marketing services company, its digital education group, as well as its other assets in Australia; and a global media and entertainment company, which would encompass News Corporation’s broadcast and worldwide cable networks, leading film and television production studios, television stations and highly successful pay-TV businesses in Europe and India,” the company said in a statement.

As expected, even with the reform of the structure of Murdoch’s business empire, he will retain control of both entities. The billionaire and his family currently control about 40 percent of the voting shares of News Corp.

“We’ve come a long way in our journey that began nearly 60 years ago with a single newspaper operating out of Adelaide,” Murdoch said, referring to his first Australian newspaper. “Each of these new companies would have the potential to continue that journey and prosper as an independent entity long into the future.”

Meanwhile, Chase Carey will serve as the new CEO of the entertainment company. The company did not disclose who will be the chief executive for the publishing company.

Spilt Driven by Hacking Scandal

The move is widely seen as an attempt to limit the damage after a scandal in Britain for journalist wiretapping of politicians, celebrities and victims of war, although News Corp. denied the split has nothing to do with the phone hacks.  Since then there’s been mounting pressure on News Corp. to get rid of its newspaper business.

Journalists and News Corp. executives were charged for the phone line interventions. Several have resigned while others have been dismissed. Murdoch and his son had appeared before a commission that investigated the facts.

In addition to the scandal, the company was badly hurt in its attempts to buy into digital media, leading to a drop in advertising revenue and circulation sales.

Let’s look at some of News Corp.’s biggest blunders:

Fall of MySpace

In 2005 Rupert Murdoch bought MySpace for $580 million as an entry strategy into the world of digital mass media. It was his attempt to make the leap to the business of Internet advertising, where giants like Google, Microsoft and more recently, Facebook have been hoarding dominate market shares and the favor of advertisers compared to traditional media groups.

At its peak MySpace attracted just over 95 million users. MySpace has been overtaken by competition and progressively lost the supremacy it had at the time of purchase. The MySpace audience has plummeted in the last four years compared to the rise of other networks such as Facebook or Twitter. In the period of just one month, according to statistics from ComScore, MySpace lost 10 million unique users.

Finally Murdoch sold the MySpace social network for $35 million, valuing the company at 93 percent lower than what he paid six years ago.

BskyB Acquisition

Murdoch wants to acquire 100 percent of the BSkyB network, the leading pay-TV provider in the UK, where he already has a nearly 40 percent share.

But the recent illegal wiretapping scandal changed everything for News International. The weekly British tabloid News of the World announced its end last year after 168 years in circulation.

Although initially the damage would be limited to News of the World, the scandal had led to the failure of the purchase of BSkyB, which became a major setback for Murdoch.


A message from John Furrier, co-founder of SiliconANGLE:

Your vote of support is important to us and it helps us keep the content FREE.

One click below supports our mission to provide free, deep, and relevant content.  

Join our community on YouTube

Join the community that includes more than 15,000 #CubeAlumni experts, including Amazon.com CEO Andy Jassy, Dell Technologies founder and CEO Michael Dell, Intel CEO Pat Gelsinger, and many more luminaries and experts.

“TheCUBE is an important partner to the industry. You guys really are a part of our events and we really appreciate you coming and I know people appreciate the content you create as well” – Andy Jassy

THANK YOU