Tell us about the market right now in terms of consolidation and new entrants – and how that’s disrupting the status quo.
There is media consolidation going on all over the world … and a few traditional players are doing most of that consolidation – companies like Burda, and Meredith. Then there are lots of new players entering the market. Primary examples would be high-net-worth individuals: Jeff Bezos buying the Washington Post, the Benioff family buying Time, and the Thai tycoon, Chatchavel Jiaravanon, buying Fortune. Finally, you’ve got non-media groups getting involved, such as the brand licensing firm, Authentic Brands Group, which acquired Sports Illustrated. So many legacy publishers see declining value in big brands whereas outside players see new potential there.
What are the motivations? Well, obviously, some of them are financial – they want to leverage audience and brand reputation into other kinds of businesses. Authentic Brands, for example, sees a lot of potential in SI-branded products, events, and possibly in gaming services. A good model of that would be Playboy, which has gone from being a media business into a brand licensing one. Their COO, David Israel, who is also a speaker here at the Congress, will address that.
What else is driving this shift? What’s in it for the likes of Jeff Bezos and co?
They’re seeing revenue potential beyond the traditional revenue sources that media has: sales from newsstands, subscriptions and advertising. As for the trade players who are doing the consolidation, they’re looking to grow audience so that they can compete digitally against the likes of Google, Facebook, Alibaba and Tencent. These are big themes in the business right now.
In summary, there are two things that are going on. One, there is consolidation at the very top with trade players. And two, there’s a lot of interest from outside the industry to use powerful brands to drive other kinds of revenue sources. (In the news space, perhaps there’s a third: a desire to sustain proper journalism in some way.)
Are we still seeing a lot of merger and acquisition activity by media players looking to buy up tech solutions and new audience access rather than building it?
Yes, I think that for many, buying is preferable to building – it’s much easier to buy technology solutions and partnerships than it is to create anything. So that’s clearly a trend. If you put aside scale, I think that a number of specialist media companies are looking for acquisitions of complementary businesses which haven’t fully exploited digital and other revenue sources. One of our clients, Active Interest Media, is a good example of that. They’ve done a great job of leveraging their existing brands, audience and advertisers across a number of different platforms – particularly with events and online education – and then applying that model as part of their acquisitions strategy.
Are there global trends and differences at all?
I think that cross-border M&A is primarily a European phenomenon … probably because Europe is a small and relatively contained geography, making it easy to manage. US companies have not been that keen, historically, to do a lot of cross-border stuff. The larger companies have done some overseas M&A … but in general, because America is such a large and rich country, media groups haven’t seen the need to do a lot of that.
Finally, data and privacy feels like it’s going to be a big issue in the coming months. What are you thoughts on that??
Yes, I think it is. In general, I think that people want to own their personal data, and only make it available as they see fit. That’s not the case now, of course. I do think that we’re beyond a tipping point here, especially after what has happened during recent elections in the US and elsewhere. It’s why some people want to break up the Big Four – they have such a monopoly of information power, and it’s only growing. So we’ll see what’s going to happen there. Europe has always been way ahead of the rest of the world when it comes to privacy and data protection.
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