In the last 30 days alone, we have witnessed the purchases of two major newspapers with storied pasts: John Henry, the principal owner of Red Sox and Liverpool FC, bought the Boston Globe from the New York Times for $70 million in cash, and Jeff Bezos, Amazon founder and CEO, bought the Washington Post for $250 million in cash.
And these are simply the highest profile purchases in what has been a wave of newspaper acquisition and consolidation going on since 2011, when Warren Buffet’s Berkshire Hathaway purchased Omaha’s newspaper company for $200 million. Since then, more than 20 newspapers have been acquired or merged every quarter, quickly transforming the newspaper business landscape.
Has the Sun Finally Set on the Globe and Papers Like it, or is a New Dawn on the Horizon?
Given the flurry of activity, one wonders whether these transactions signify a new start for the long beleaguered newspaper business, or the last desperate gasps of a dying business model.
After all, the newspaper business has been in a long-term decline, with both advertising and subscription revenues rapidly deteriorating. Earlier efforts by cash-rich investors to revive or grow the business have tended to end in failure (the Chicago Tribune’s acquisition is case in point).
I tend to think that the new buyers — who should harbor no illusions about the difficulties facing the traditional print media business — will give these companies a chance to revamp themselves by adopting new formats and business models while learning from the financial and strategic rigor of the acquirers. It is still very early in the process to declare whether these companies will succeed or predict what form or business model will survive into the next decades and into the future. Yet there is much to look forward to, especially if you look closely at both ends of the industries — the largest, most storied media companies and young, hungry startups that are just getting out of their “garage” days.
For example, AOL is finally getting back on track as a dominant online media company with the acquisition of Huffington Post and other online media outlets, and is turning a profit after painful restructure. Meanwhile, the New York Times‘ experiment with the paywall continues, and even though skeptics might cite a slowing pace of online subscribers growth as a cause for concern, online subscription is becoming a larger and larger portion of the Times’ revenue base. The newspaper is pushing ahead with its online revenue generation plan, and in fact, this is the trend across the entire industry — digital revenue has grown as a percentage of all revenue, and online subscription revenue has more than tripled from 2011 to 2012.
On the innovation front, as I mentioned in a blog post from the beginning of the year, many new startups are taking on the challenge of making news media relevant, enjoyable, and profitable again. New content platforms like Medium are focused on enhancing the reading and writing experience, while mobile apps startups like Pulse take news reading for mobile devices to a new level. Startups like Storify and News.le, meanwhile, are using technology to help create a different narrative experience for both the news creator and the news reader. Soon these arcs of innovations will converge with the larger organizations’ quest for growth and transformation, and I am very hopeful that we will have a large, thriving news media industry well into the 21st century and beyond.
How do you see the news media industry evolving?