Wednesday, June 12, 2013

If Content Is King, Why Is News Corp. Splitting?

News Corp, home of Fox Broadcasting, 20th Century Fox, The Wall Street Journal, and The New York Post, is splitting its publishing and entertainment businesses.  Thus the first two companies won't be connected to the latter two, post split.  So why doesn't a content company not want to take full advantage of its wide range of content creating businesses? "Last year, News Corp. decided to split itself after years of shareholder pressure to spin off the lower-growth publishing side of the business."  That's right, not all content is created equal in the eyes of shareholders.

As the printed word seems to have less value than video, print-based companies are finding it harder and harder to transition to a successful digital business.  And yet, I hope that this thinking is simply short sighted.  The printed word, regardless of the platform it is presented on, is a very powerful instrument.  Print has been especially hurt by the web and the glut of free content, like this very blog.  The old adage, why buy the cow when the milk is free, has been haunting all content, both print and video.  But exclusivity and uniqueness of content still impresses consumers enough that they are willing to buy it.  And there is still synergies of tying together print and video in a subscription service.

Perhaps the challenge of print is that the digital ad and subscription revenue has not yet caught up with the current model.  And the transition, while slow, is creating lower profit margins.  But I believe there is a light at the end of this tunnel and digital print subscription services can survive, especially if constructed with a multi-media array of content. 

News Corp print side could blossom with a stronger synergistic approach and new strategies to compete.  But without that ownership holding it together, it also opens the print side to engage in wider partnerships that it may have been dissuaded from entering under the current umbrella.  I believe that there is still a future in newspaper and magazine subscription businesses, especially when tied with related content that better utilizes the digital platform, and new strategies that grow incremental and additional revenue streams.  So despite an expected split, each side of News Corp can continue to prosper. 

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