Media Mergers And Virtual Disruption

Michael Hedges January 23, 2019 Follow on Twitter

Big mergers and acquisitions - media and otherwise - almost always result in a period of adjustment. This can last years as executives and shareholders begin executing new operating and financial plans. Those taking on debt tend to shed the odd bits. Those with newly found piles of cash tend to circle the wagons. Everything changes, especially the names.

It comes as little surprise, financial pressures on newspapers understood, that Times Newspapers, a subsidiary of News UK, has asked the UK government for permission to relieve some of that by allowing The Times and The Sunday Times to have “more flexibility to share resources,” reported PrintWeek (January 22). The publisher has operated the titles separately under an agreement with regulators on the 1981 acquisition. For that transaction to move forward, Rupert Murdoch, principal owner of News Corporation, agreed the titles would be operationally and editorially independent.

The UK Department for Digital, Culture, Media and Sport (DCMS) first heard overtures from News UK last October then reported the application to revise the long-ago agreed terms in the second week of January. The application noted that “virtually all” national UK newspapers have combined weekday and Sunday editions. The DCMS also released a letter from News UK’s independent national directors invoking the “powerful forces that (have) affected the media industry since the advent of digital technology,” quoted by BBC News (January 18). Culture Secretary Jeremy Wright will evaluate the proposal after comments from interested parties are received in the second week of February.

News UK is asking for a “small change” to “contend with the continual disruption that has faced the media industry in the digital age,” said a statement, quoted by Press Gazette (January 18). Others reporting the application, including Reuters (January 18), referred to a “merger.”

Independent national directors of Times Newspapers effectively halted what they deemed a “merger” of The Times and Sunday Times in 2013 over hiring the of chief editors for both newspapers after James Harding was fired as chief editor of The Times. The company’s intention was to replace Mr. Harding with Sunday Times chief editor John Witherow then bumping up Sunday Times deputy editor Martin Ivens. After nine months the independent editors relented and both editors took their new positions.

"News UK remains remains fully committed to complying with the undertakings given to the Secretary of State for Trade by Rupert Murdoch in 1981, and I would like to thank the Independent National Directors for their dedication to discharging their responsibilities under the undertakings and their ongoing commitment to the two titles,” said News UK chief executive Mike Darcey, quoted by Press Gazette (September 30, 2013). Three months earlier News International was renamed News UK, the last gasp from the phone hacking scandal that led to the closing of tabloid News Of The World.

Alas, illicit phone hacking by UK newspaper reporters, rogue and otherwise, continues to bubble into view. A lawyer representing claimants alleging phone hacking by a reporter employed by The Sun, the surviving News UK tabloid title, told a court that the practice was “widespread,” said the Guardian (January 23), and more trials are pending. News UK has reached settlement agreements with “dozens” of claimants in recent years. The company has long rejected the alleged scope of the phone hacking practice.

Also without surprise, the National Union of Journalists (NUJ) has cast a wary eye on the recent development. “We are concerned about the News UK request to change the existing legal undertakings and the potential impact shared content will have on journalists and journalism,” said its statement. “Cuts are likely to follow if the company are allowed to proceed.” The two titles currently employ 505 people.

The Murdoch family and other various shareholders will be, as they say, in tall cotton in a few weeks. Most assets of 21st Century Fox will accrue to the Walt Disney Company for the tidy sum of US$71 billion. A “New” Fox Corporation has come to be, focused on news assets from News Corporation, including Australian, UK and US newspapers, broadcast outlets and their related online extension plus remnants of 21st Century Fox. Most financial analysts believe the recent spurt of gigantic media mergers and acquisitions - Disney/21CFox, AT&T/Time Warner, Comcast/Sky - will take a breather in 2019.