Most Acquisitions Don’t Work, they Destroy Value: Raju Narisetti, News Corp

Raju Narisetti, Senior VP, Strategy, News Corp, reveals why it is important to say ‘no’ to some investment opportunities, and how News Corp is spreading its bets through multiple revenue streams.


After the PropTiger deal you had said, "I would look at it as the beginning of several things we would do in the future in India." Give us a peek into the future.
You can already see some of the things playing out. As more and more Indians increasingly spend their lives on mobile, there is a need for honest and transparent data providers. Our investments, therefore, will be aligned around these spaces. We have invested in a website, called Big Decision, which is set to be re-launched later this year. News Corp has a fairly large books’ business in India (Harper Collins India) which we would like to grow it.

We will not get into something that is not core to us even though it may be very lucrative. For instance, it is possible that a sector like mobile payment will do very well in India but since News Corp is not a financial investor, it won’t participate in it. I don’t want to bring a checkbook to a transaction. I want to bring a lot of other synergies and skills.

Currently, News Corp has $2 Bn in cash, no debt, close to $9 Bn in revenues, and 800 Mn EBIDTA.  Still, any investment has to be a good fit beyond the financial fit.

So would the media vertical figure in your scheme of things given that it is core to News Corp?
It seems unlikely simply because the Indian media restrictions around ownerships and operations are still in place, especially for a foreign player. I also don’t see a lot of media business model innovation taking place in India.

But is there a dedicated fund or a specific timetable for India?
Our approach is very opportunistic. There is no fund dedicated, there is no time table, and no pressure to do deals. We get a lot of inbound interests because of the health of our company and our interest in India. At any given time, there are half a dozen different opportunities, at different stages, for evaluation. The toughest, and the most important part, of my job is to say ‘no.’ Most of the acquisitions don’t work, they destroy value instead. So, I am not in a hurry to take shareholder wealth and spread it just because it is there to spread. There is nothing imminent in the next 2-3 months. Will there be something over the next 1-2 years, I hope so.

With a quantum jump in content generation, advertisers are spoilt for choice. As a media company, how is News Corp reducing its dependency on advertising?
If you are betting your future on advertising, you know how that story will end. It will not end well simply because the supply of content will be infinite. Six years ago, there was no BuzzFeed, Firstpost or Scroll India. All these have come in the last few years. As an advertiser, I have lot more choice than traditional media companies. This trend is only going to grow in the future. The solution lies in having multiple streams of revenue. Almost all of our businesses have advertisement, subscription, and a third component – transaction, events or a data product. We are spreading our bets through multiple revenue streams.

The other challenge is of online businesses taking away revenues from media companies. For instance, a real estate portal or an automobile website competes with a media entity in content and advertisement. How can media companies prevent this onslaught?
Publishers have a choice here. They can say we are only in the content space and try and hang on to it even as others take away the business just as they took away classified. Or if you are News Corp, you will say we are very good at content, very good at B2C relationships (Wall Street Journal alone gets 60-70 million visitors per month), very good at monetization, and we are good at user engagement and experience.
The only thing we don’t have is transaction capability. So, instead of waiting for others to come and take our content space, we will acquire the transaction capabilities and go after them.

The digital platform has thrown up new matrices like page views, bounce rates and unique visitors. How much importance should be accorded to these matrices?
We have all evolved as an industry. It was hard to find out if our product was actually being used or not. If we had a newspaper, we assumed everybody read all articles. We lived in that nice happy myth, and charged advertisers on number of copies sold.  Digital is measurable. At the end of the day, page views do matter as they are linked to revenues and profitability. I am not one of those people who feels matrices are bad. However matrices can be a problem depending on your organization. It is good to have more matrices to measure the effectiveness of our products.



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