Communications-Related Headlines

Digital Beat - EXTRA
3/28/2000

Ownership

The Trib Eats the Times, But Who Cares?
By Kevin Taglang

Earlier this month, our Headlines service reported extensively on the proposed purchase of the Times Mirror Company by the Tribune Company for approximately $6.45 billion. "So one newspaper buys another," the New York Times quoted high-tech pundit Esther Dyson saying. "So what?" And what's the Digital Beat doing covering this "old media" merger when there's Internet stocks we could be tracking?

In recent months we've been looking at the creation of behemoth corporations -- America Online/Time Warner, Viacom/CBS -- that seem to fall into a trend. Additional examples are Walt Disney/Capital Cities/ABC, CBS/Infinity Broadcasting/King World, AT&T/TCI/MediaOne, and Clear Channel/AMFM/SFX Entertainment. Just how big does a company need to be to be considered big anymore?

At the same time, these same companies are urging federal regulators to loosen ownership caps intended to guard the marketplace of ideas. In September, executives from some of the information industries' largest corporations -- Viacom, CBS, AT&T and MediaOne -- asked the government to loosen rules so that mergers would be approved without selling off assets.

The Advertising Perspective

The intent of the decades-old rules is to insure that there are enough different voices, opinions and news gathers to keep citizens informed. Corporations are now arguing that these rules are arcane and do not apply in a "broadband Internet world" (wherever that might exist). "The government should now take a look at whether the original rationale of the rule is still valid -- namely, the ability to bottleneck programming," said James Cicconi, general counsel and head of government relations for AT&T.

The New York Times' Stuart Elliot offered a perspective on these megamergers from the world of advertising -- which raises a new economic rationale for opposing this concentration. The mergers are creating media and entertainment conglomerates that combine disparate properties to offer marketers additional opportunities to buy commercial time and advertising space in "cross-media packages," as they are coming to be known. From Web sites, to TV and radio networks and stations, to print media, to entertainment properties like film studios, sports teams and TV program syndicators, cross-promotional campaigns are becoming increasingly popular as a way for these corporations to increase revenues.

"I see only more consolidation, which clearly has pros and cons for advertising agencies," said one New York media director. "To the degree you want to make multimedia deals, there's more to play with. But to the degree there's less competition, and higher pricing, it's not a pretty thing."

Another advertising executive adds: "If you buy all the pieces of a pie, the cost should be less. But they believe the value of the whole pie is so much greater than the individual pieces." Media-entertainment conglomerates are becoming "a hundred miles deep" in key markets, offering a host of channels to reach consumers. Those customers are surrounded by different points of contact: the radio or TV as they prepare for and get to work, billboards along the way, on the Internet as people surf instead of working, in newspaper ads as they take a coffee break, in magazines in the restroom and so forth, ad nauseum.

What Does Consolidation Look Like?

The Tribune, for example, will be the largest multimedia company in four of the five most populous states: California, New York, Illinois and Florida. In the fifth, Texas, it will own two major-market TV stations: KDAF-TV in Dallas and KHWB-TV in Houston.

Think of Disney with ESPN, a cable network which is being expanded to magazine, radio, the Internet and bars. "The idea is to take the strongest brands the company has and surround each with multimedia ventures," said an executive in an interactive media service agency.

"The same big [media] players are every bit as keen on swallowing the Internet as they have the traditional media," said New York University's Mark Crispin Miller. "The consensus is that the Internet is getting less diverse and more homogenized as it becomes more commercial."

What does the consolidated media world look like: