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AQA BUSS4 Section B Practice Question - ITV & News Corp
7th February 2010
In August 2009, ITV plc sold website Friends Reunited for just £25m - four years after buying the social network site for £175m. Created by the merger of Carlton and Granada in 2004, ITV’s acquisition was similar to deals done at the same time by other traditional media companies looking to expand into emerging digital markets in order to bolster weak advertising revenues. In July 2005, News Corp, the company run by media mogul Rupert Murdoch, paid £550m to buy social networking site MySpace. However, in recent years, websites such as Friends Reunited and MySpace have experienced declining traffic and revenues as they have been overtaken by innovative sites wuch as Facebook and Twitter.
To what extent should large, established companies focus on organic rather than acquisitive growth as a way of exploiting opportunities in fast-growing markets? Justify your answer by reference to ITV, News Corp or other businesses that you know. (40 marks).
Background reading / viewing
MySpace boss predicts growth (BBC Video)
ITV sells Friends Reunited at loss (BBC - August 2009)
Outline answer
Will appear here in March 2010