Media moguls don't live forever
US media America's media conglomerates used to buy up everything that wasn't nailed down. Now they are shrinking again.
US media America's media conglomerates used to buy up everything that wasn't nailed down. While Axel Springer Verlag is taking over ProSieben Sat 1 AG in Germany, news of a split-up of Viacom and the spin-off of Time Warner Cable from the parent company is making headlines in the USA. Disney is also thinking about getting rid of its radio business and Liberty Media some of its TV stations. The reason: the shares of these success-accustomed companies have been falling for years and investors are putting pressure on them. "The conglomerates are finally being shaken up," comments Diane Mermigas from the trade magazine The Hollywood Reporter. "They are finding it hard to keep all the promises about synergies and value growth."
Carl Icahn, classified by Forbes as a "corporate raider", made the most prominent move last week. He is a billionaire shareholder activist who has bought shares in major corporations in the past and subsequently put them under pressure to reform as a major shareholder. He is demanding that Richard Parsons, the head of Time-Warner, uncouple the entire cable television business in order to drive up the Group's share price again - a strategy that Viacom is also pursuing with its uncoupling of the MTV Group. "It's a common practice to spin off parts of the business that are more dynamic and higher risk," says Ted Magder, professor of media economics at New York University, and sees this as "a brilliant move."
The business models of the 1990s are quickly becoming outdated. Television stations and film studios, important components of the conglomerates, are confronted with declining viewer interest, and advertising money is also increasingly flowing towards online media. The growth rates of successful Internet companies such as Google and Yahoo are putting pressure on the industry giants, whose growth rates are expected to fall from 23 percent in the boom years to an average of 5 percent in the coming years. Those groups that have not yet planned any spin-offs, such as News Corporation or NBC Universal, are increasingly trying to increase their revenues from the internet and digital media sectors.
Media moguls are slowly becoming obsolete
At the same time, many media companies are facing a generational change. The celebrated moguls such as Sumner Redstone at Viacom or Rupert Murdoch at News Corporation will not live forever, and the question of succession is a tough one. Only a few weeks ago, the designated heir to the throne, Lachlan Murdoch, left News Corporation, partly, according to industry observers, because Rupert Murdoch does not want to diminish his power. In this way, it remains to be seen whether the family will dominate the fortunes of the company in the future, as some believe that News Corporation will also break up after the death of the old man. In addition, more and more publishing families that have long shaped the face of renowned US newspapers are giving up their claim to power. After the Pulitzers, the Brancroft family is currently also considering whether to sell its "golden goose", the Wall Street Journal.
Diane Mermigas believes that in a listed company like NewsCorp, family ties are no longer the key. "The next generation of media and entertainment executives must bring a combination of entrepreneurial spirit and a sense of technological wonder. That's what's needed to make the digital world accessible to a mass audience," she says. "It's not necessarily obvious that this is being sufficiently encouraged, because there's still far too much playing by the old rules."
Gerti Schön
Carl Icahn, classified by Forbes as a "corporate raider", made the most prominent move last week. He is a billionaire shareholder activist who has bought shares in major corporations in the past and subsequently put them under pressure to reform as a major shareholder. He is demanding that Richard Parsons, the head of Time-Warner, uncouple the entire cable television business in order to drive up the Group's share price again - a strategy that Viacom is also pursuing with its uncoupling of the MTV Group. "It's a common practice to spin off parts of the business that are more dynamic and higher risk," says Ted Magder, professor of media economics at New York University, and sees this as "a brilliant move."
The business models of the 1990s are quickly becoming outdated. Television stations and film studios, important components of the conglomerates, are confronted with declining viewer interest, and advertising money is also increasingly flowing towards online media. The growth rates of successful Internet companies such as Google and Yahoo are putting pressure on the industry giants, whose growth rates are expected to fall from 23 percent in the boom years to an average of 5 percent in the coming years. Those groups that have not yet planned any spin-offs, such as News Corporation or NBC Universal, are increasingly trying to increase their revenues from the internet and digital media sectors.
Media moguls are slowly becoming obsolete
At the same time, many media companies are facing a generational change. The celebrated moguls such as Sumner Redstone at Viacom or Rupert Murdoch at News Corporation will not live forever, and the question of succession is a tough one. Only a few weeks ago, the designated heir to the throne, Lachlan Murdoch, left News Corporation, partly, according to industry observers, because Rupert Murdoch does not want to diminish his power. In this way, it remains to be seen whether the family will dominate the fortunes of the company in the future, as some believe that News Corporation will also break up after the death of the old man. In addition, more and more publishing families that have long shaped the face of renowned US newspapers are giving up their claim to power. After the Pulitzers, the Brancroft family is currently also considering whether to sell its "golden goose", the Wall Street Journal.
Diane Mermigas believes that in a listed company like NewsCorp, family ties are no longer the key. "The next generation of media and entertainment executives must bring a combination of entrepreneurial spirit and a sense of technological wonder. That's what's needed to make the digital world accessible to a mass audience," she says. "It's not necessarily obvious that this is being sufficiently encouraged, because there's still far too much playing by the old rules."
Gerti Schön
