Why should modern media companies look outside news businesses for revenue opportunities?
For News Corp, its magazine business is relatively small, with most magazine titles located in Australia. However, in the last three years, since News Corp split into two companies (News Corp and 21st Century Fox), it has made some interesting moves that other media companies should be learning from.
Before joining News Corp as senior vice president, strategy, Raju Narisetti was managing editor of The Wall Street Journal Digital Network, deputy managing editor of The Wall Street Journal, and managing editor of The Washington Post.
Olga Nasalskaya spoke to Narisetti about News Corp’s successful strategies for the digital world.
Is News Corp a media company?
Yes and no. We like to think of ourselves as a news, information, publishing and digital real estate company. One could ask what all these categories have in common. Information, digital and data are a common thread. All of our businesses face the same challenge, which is the migration of our customers from existing platforms to more digital and mobile platforms. Increasingly, the total number of pure news companies in our portfolio, continues to shrink as we add other businesses.
Which are the most profitable, most important, and most innovative products at News Corp?
As a publicly traded company, we don’t disclosed profitability at the product level. This year the company we are most excited about is Harper Collins, our book publishing business. First of all, this is a very efficiently run company. Secondly, they have well recognised the power of data, analytics and digital publishing. While the book industry is in some ways, in the same situation as the music industry as legacy formats and distribution channels are diminishing, it has done a good job in taking advantage of this change to improve the traditional books business itself.
Another reason for this year’s Harper Collins’ success is the sequel to Harper Lee’s To Kill a Mockingbird, Go Set a Watchman. It sold 1.1m copies in its first week of sales, which will make it the best selling book in the US this year. Meanwhile, in 2014 News Corp acquired Harlequin, the romance publisher, which became a division of Harper Collins. That integration has gone well.
We have powerful brands, a great set of authors, both in ebooks and in print and a well-managed team – all these factors make Harper Collins a big success for News Corp.
Another business I am personally excited about is Storyful, which was our first acquisition as the new News Corp in 2013 and it continues to be successful. Storyful launched partnerships with Facebook last year and YouTube this year. In addition to verifying videos and giving newsrooms a tool to discover newsworthy social content, Storyful does an important function of obtaining permission to publish user–generated content.
They help publishers with licensing, and they help content creators get paid for their work. Storyful is improving the user-generated content ecosystem in a big way. Storyful also plays a critical role in helping brands verify social media content, and then helps them use it on their platforms to engage with their audiences. The company is small in terms of its financial impact, but it is important for us as there is a higher purpose to this company.
Finally, another business in News Corp portfolio we are proud of is our growing digital real estate portfolio. Last year we acquired Move, Inc., which owns Realtor.com, for about US$1bn. Since we’ve bought it, there has been a significant improvement in traffic and other metrics across all products that Move, Inc. owns. Timing has worked out well, because the US real estate market is coming back after a downturn.
Our news businesses with strong brands – The Wall Street Journal, The Times, and The Australian – continue to play an important, meaningful role for us, despite the fact that it is a challenging, tough business. Multiple streams of revenue model (subscription, advertising, sales, events) help us deal with industry challenges better than other companies that only rely on advertising sales. Yet, another challenge for news businesses is that the audience continues its steady migration to mobile, and monetising mobile still remains a real puzzle.
At one of the conferences this summer you said that “News Corp is probably one of the biggest digital real estate companies in the world,” when speaking about investments in classified advertising. How is this investment helping the company?
In terms of geographical reach, we are in the US, India, China and Italy, and in terms of the sheer number of people coming to our digital real estate web sites globally, yes, we are one of the leaders on the market.
Why real estate? We’ve actually been in this business for a long time now. The big picture is that revenue streams that used to be with news media via classifieds, such as cars, travel, jobs, automobiles, real estate, have slowly migrated out of the classifieds category and became independent, transaction-only digital companies. They became Cars.com, Monster.com and LinkedIn etc. But here is what happened in the last two to three years: all of transactions-only businesses have discovered that if they rely only on transactions, it becomes a very expensive business to bring in new customers, keep them and engage them. The only way these companies can do well is if they surround a transaction with tools, content and a community. Having taken the transaction business away from news, transaction companies are now coming back to content business. So if you are a news publisher like News Corp, you can say we have a great real estate content, we know how to create and drive engagement and we have audience reach. Some 60-70 million uniques come to the WSJ Digital Network every month. The only missing thing is transaction capabilities. So that is a large part of our bet, let’s go reacquire transaction capability, or build it ourselves, or get it through partnerships.
In the end, all news businesses compete for the single non-renewable resource of our audience, which is their time and we don’t want to cede that now to transaction-led brands.
Among all News Corp’s markets (geographically), which one is “the next big thing” and why?
It is still the US, simply because a majority of our businesses have a significant presence there. In terms of long-term growth, it will be Asia.
I’ve been involved with operations in India this past year, for example. We’ve made three transactions there in the last eight months. We bought into Proptiger.com, a digital real estate business, VCCircle Network, a data and information subscription businesses. Another investment is a startup called Big Decisions, which is built around helping Indians make better financial decisions through smart digital tools and calculators.
What other types of investments media companies should be looking at? Should media companies be betting on startups?
It’s hard to generalise, but what I believe in is that companies that continue to rely only on advertising are going to have a hard time. You have to have multiple streams of revenue.
Our priority is to better monetise what you already have, rather than trying to add new brands with consumer-facing content, because that usually means adding new costs. The question for me is, why am I adding more capacity when my challenge is monetising what I already have? Would it help me to buy, say, 20 per cent of the “new new thing”? How am I going to benefit from that acquisition? Often companies chase investments and the “new new thing” thinking they can leverage it.
It seems that European media companies are more entrepreneurial than American companies and they are willing to take risks by investing in start-ups.
I am not aware of any great examples of European media companies acquiring a start-up that brought benefits to the core organisation. The day I hear of an amazing media company created in Europe, which hasn’t happened in quite a while, I will agree that Europeans are doing the right investments. All the digital news companies that you are hear about – Buzzfeed, Huffington Post, Quartz, Vice, Politico – not one of them has been born in Europe, they’ve all been started in the US and are now expanding to Europe.
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