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Continued Media Consolidation

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March 10, 2020
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Continued Media Consolidation

Consolidation continues as regulations shift in the U.S. and margins shrink for traditional media companies.

Key Insight

Consolidation continues as regulations shift in the U.S. and margins shrink for traditional media companies. As ownership concentrates into a handful of conglomerates, historic norms about diversity in the press and on the airwaves are challenged.

Why It Matters

Legacy news publishers will continue to face intense merger pressure this year.

Examples

Last year saw the completion of mega deals that were years in the making: CBS and Viacom spent much of the year flirting before coming to terms and finalizing their reunion in December. Disney and Fox completed their merger in March, a deal so large it shifted control of Hulu.

An appeals court gave final clearance for AT&T’s acquisition of Warner Media in February, rejecting the Justice Department’s argument that the deal was anti-competitive.

Just weeks after Gannett defended itself from a hostile takeover bid from Digital First Media, Gannett and Gatehouse Media—the two biggest newspaper publishers in the United States—announced plans to merge.

Alden Global Capital, a hedge fund that owns a chain of newspapers under the name Media News Group, became the largest shareholder in Tribune Publishing, an American newspaper publisher, in September.

U.S. telecommunications firm Nexstar acquired Tribune Local Media in September, creating the largest operator of local television stations in the country. That deal required Nexstar to divest from 21 stations in order to comply with Federal Communication Commission regulations about media ownership.

The extent of media concentration means those FCC regulations have started to produce counter-intuitive outcomes: In Ohio, three daily newspapers owned by Cox Media Group changed their publication schedule to three days per week after Apollo Global Management acquired a controlling share. (FCC rules on cross-ownership only apply to newspapers that publish four or more times per week).

What’s Next

FCC Chair Ajit Pai’s push to deregulate has accelerated the pace—and the corporate benefits—of consolidation. More recent FCC votes may have a more immediate impact on the local news landscape and corporate profits: At the FCC’s August meeting, the Republican-appointed majority voted to limit the ability of municipalities to assess “franchise fees” that support local access TV stations and other community services. The new rule will likely boost profits for internet service providers and reduce the capacity for publicly-funded media to compete.

The Impact

Media consolidation affects governments, businesses and citizens everywhere.

Watchlist

Asahi Shimbun Company, AT&T, CBS, Center for Innovation and Sustainability In Local Media at the University of North Carolina at Chapel Hill, Comcast, Cox Media Group, Digital First Media, Disney, FCC, Gannett, Grupo Globo, Hearst, Hubert Burda Media, ITU, local access channels, Meredith Corp, Microsoft, News Corp, Nexstar, Sinclair Broadcast Group, Univision, news organizations everywhere.