While the media headlines of 2017 have been dominated by mergers and acquisitions, this week’s new developments have shown a more complete picture: smaller, more niche outlets have been struggling to keep up.
Federal Communications Commission’s (FCC) free market mindset has raised the stakes in the media industry, causing outlets to either consolidate, struggle to compete, raise large sums of money or, among staffers, attempt to unionize.
Something went crazy in the media bizosphere today. A flood of news about companies.
— Jay Rosen (@jayrosen_nyu) November 16, 2017
Currently, there are two big mergers facing government scrutiny; AT&T/Time Warner and Sinclair/Tribune, with major news on both fronts coming in this week. While the government seemingly wants to block the AT&T/Time Warner deal, experts say a decision to do so would reverse decades of antitrust law. In another precedent-breaking move, the FCC on Thursday voted to repeal its decades-old regulations concerning local media ownership, paving the way for an approval of the Sinclair/Tribune merger.
Also this week, Disney and Comcast have approached 21st Century Fox to inquire about purchasing most of Fox’s assets, excluding the Fox News Channel and Fox Sports. Over the past several years, mergers have become increasingly common (for more detail, check out MediaFile’s story on mergers from last year). As Fast Company’s Mark Sullivan wrote in March, “A combination of political transition, economic forces, and good timing may spark a flurry of mergers and acquisitions in the telecommunications and media industries this year.”
While this new era of consolidation has led to stock price increases for the major players, smaller outlets have struggled. The Wall Street Journal reported this week that Buzzfeed and Vice Media, two emerging digital outlets, are expected to miss their revenue targets for this year. They also reported that Mashable, another online news company, is expected to sell for $50 million, a much lower price than their $250 million valuation in 2016.
Bloomberg has also reported this week that half a dozen digital outlets are exploring sales to large media companies due to down revenue–“a more realistic view that survival may hinge on being part of a larger company.” CNN Money’s Dylan Breyer further reported on Friday that the Daily Beast is eyeing a potential sale.
Another online, small-media outlet recently shut down completely due to capitalist pressures. The billionaire owner of Gothamist and DNAinfo, Joe Ricketts, shut down his local news reporting empire because of concerns over profitability. Journalists claim the shutdown was in response to their unionization attempts. Vox News staff also voted late this week to unionize with the Writers Guild of America East. These unionization efforts can additionally be viewed in the context of a new media landscape that encourages consolidation.
The exception to the trend of small, digital outlets struggling is Axios. As The Wall Street Journal’s Benjamin Mullin reported this week, the media startup founded by ex-Politico staffers last year has just raised $20 million to fund an expansion. Importantly, Axios differs from its struggling competitors because of its emphasis on short, business memo-style content, newsletters and its inherent appeal to corporate executives.
While the Trump administration’s recent actions may send contradictory messages concerning mergers, FCC Chairman Ajit Pai has called media ownership rules “quite antiquated” and the FCC’s recent ruling suggest a new wave of consolidation is coming. As CNN’s Senior Media Correspondent, Brian Stelter, wrote on Friday, “In every corner of the media business right now, something is up for sale. What’s going on?”
In every corner of the media business right now, something is up for sale. What's going on? https://t.co/XdelYIHEkV
— Brian Stelter (@brianstelter) November 17, 2017
While it is good news for executives and stock owners, this new era is already causing issues for independent digital outlets that are struggling under the realities of the new market.