Relax; the reign of the Media Mogul is (almost) Over.
Friday, September 25, 2009 by willist
When Luke played the video on Monday that challenged old media corporations to “listen” to users. It got me thinking, do we really need to worry too much about traditional media companies like News Corp, Time Warner, Viacom and CBS taking monopolistic positions in the new media sphere.
I think not. In the last decade or so, we have seen some of the largest and arguably most unsuccessful mergers of all time. CBS has bought CNET, News Corp purchased MySpace and AOL merged with Time Warner. The results of these moves have been average at best and disastrous in the worst instance.
Many of the critics of these moves equate careless acquisitions to empire building by majority shareholding magnates such as News Corp’s Rupert Murdoch, and Viacom’s Sumner Redstone. But let’s not forget the largest and (arguably) most tragic (in a sort of your dad singing Dire Straits and posting it on YouTube kind of way) merger of all time. With AOL and Time Warner neither had a majority shareholder. The two merged at the peak of the dot-com boom with an eye to creating synergy and a new 21st century media organization to rule them all. But since then AOL has crumbled (and is about to be spun off and relisted on the stock exchange) and Time Warner’s print publications have faced a circulation death spiral (a trend not unique to Time Warner, but illustrative of plunging revenue all the same).
With this in mind, we might look at News Corp’s $500 Million dollar acquisition of MySpace, an acquisition mostly funded by borrowing against News Corp’s other core assets. News Corp has taken huge write-downs on the MySpace acquisition and its other online ventures, as has Sumner Redstone, who has just had to sell a large proportion of his stake in CBS and Viacom to pay off debt. So here’s my point, as revenue drops in traditional media, and the credit markets remain tighter due to increased regulation, soon it will not be a case of old media trying to buy relevance in New Media, but rather them no longer being able to afford to.