Those Dancing Days Are Fading

Michael Hedges October 15, 2022 Follow on Twitter

The funereal drumbeats have echoed through media houses for some time. Now the somber trumpets have joined in. Economics are sour, profit margins worst. After housing and food, consumers are cutting back on everything. Advertisers have moved to TikTok. Investors’ mood is Wagnerian.

This week (October 12) Gannett indicated a freeze on hiring and other employment-related benefits. The company publishes USA Today and 200 local and regional newspapers. Second quarter financial results were, bluntly, weak, losing US$50 million. Employees will be required to take a one-week unpaid leave in December and buyout “volunteers” are being sought, reported Poynter (October 13). Two months ago, Gannett severed 400 employees, 3% of total workforce.

“These are truly challenging times,” said chief executive Mike Reed in an email to staff. “The company continues to face headwinds and uncertainty from the deteriorating macroeconomic environment which has led the executive team to take further immediate action.” The company took on US$1 billion in debt to acquire Gatehouse Media in 2019 and, it seems, financial institutions are rattling for their money. Digital subscription revenues have remained firm while ad revenue growth continues soft. Newsroom union News Guild said their members will not be affected, due to contractual obligations.

Restructuring is the operant term for Warner Bros. Discovery (WBD), another large media house with debt tugging it into the deep. Over the last few weeks there have been a slew of firings, executive and otherwise, and the company is but six-months old. Divisions, there are many, have been consolidated. In the midst of this turmoil, chief executive David Zazlav felt compelled to announce to staff that the company was “absolutely not for sale,” after rumors surfaced of “interest” from telecom Comcast, owner of NBCUniversal, reported Hollywood Reporter (September 28). WBD’s debt is bigger than many countries.

US media watchers, generally, gave the merger of Warner Media and Discovery considerable space. After all, anything to strip Warner Media from the dreaded phone company AT&T would be an improvement. The well-wishing has come to an end. “There’s zero real evidence that the coagulated pile of freshly merged media companies are actually building something better than had already existed years earlier,” offered TechDirt (October 13). “They’re largely just engaged in a performative dance that serves no real function outside of goosing stock value, trimming tax burdens, and fattening executive compensation and ‘deal making’ resumes, while lower level employees, consumers, and product customers get slapped in the face.”

Further entering the “Twilight Zone” mode, at the end of last week News Corp and Fox Corp disclosed their respective boards, mostly members of the Murdoch family, are “exploring” re-merging, reported CNBC (October 14). Fox Corp is best known for operating the decidedly right-wing Fox News channel, not to forget hugely profitable pay-TV sports channels. News Corp is the publishing side; from the Wall Street Journal and the Dow Jones franchise to various Australian and UK outlets, including the notorious tabloid the Sun the Times. The two units were split in 2013 after the painful phone hacking scandal.

Again, media watchers immediately see cost savings. "The rumor has been bouncing around for the past three weeks," wrote Business Insider (October 14), suggesting the Elder Mr. Murdoch sees consolidation benefiting the Fox brand. Others noted, as they always do, a possible succession plan as Mr. Murdoch is 91 years old. Bloomberg (October 15) more bluntly suggested he “wants to put his media empire back together.”

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• Hot Topics - Mergers and Acquisitions