Media Matters

First newspapers were the mass medium, then radio, TV and now the Web.

Each has fragmented (but not replaced) the mass audience of the incumbent in a quasi-Schumpterian way. Now multi-channel TV and radio, multiplex cinemas and the exponential growth of the Web has fragmented mass media audiences further.

So what should media owners do?

Either learn to be lean (how to survive on and expect lower revenues — through tools like outsourcing and improving their ROSR) or become media conglomerates through M+A or organic growth (or both). Consolidation towards oligopoly is already happening (concentration ratios are getting higher), but it’ll keep going as the straggling wildebeest are eaten up.

But even then the share prices and margins of the survivors will never be as good again unless the post-print media owners can get their advertising yields up. Being less asset-heavy after ditching expensive presses, paper and distribution costs will help.

The laws of business as we know them now would predict that only those at the top of the media curve will achieve that through market power and multiple outlets to offer advertisers in packages. Those further down The Long Tail won’t.

But over time the curve will flatten as fragmented audiences become part of the oligopoly giants — leading to less difference between the biggest and the smallest.

Traditional views predict that will lead to less price competition among the giants and so yields will rise again.

Labels: fragmentation, future, newspapers, revenues, share price

# posted by Unknown @ 4:37 pm