“This life is slow suicide, unless you read.”Herman Wouk

Friday, September 22, 2006

Tribune Co. Joins Reversal of Media Consolidation

The nascent but distinct and ongoing reversal of the corporate consolidation of the U.S. media received another boost yesterday with the Tribune Co.'s announcement that it is willing to sell any or all of its 11 newspapers and 25 television stations.

The Tribune Co. announcement follows hard on the heels of the selloff of a dozen newspapers by Knight Ridder, which was the nation's second-largest newspaper chain (after Gannett).

“The restructuring of these partnerships frees the company to move quickly to pursue strategic alternatives to further enhance shareholder value,” said Tribune Co. CEO Dennis FitzSimons. “Under these terms, all shareholders benefit.”

The firm's newspapers have been hit hard by competition from the internet, as the New York Times reports:
The media business has been in turmoil as readers, viewers and advertisers have shifted their habits and turned to the Internet. Newspapers in particular are facing a slump in circulation and little growth in advertising revenues while at the same time facing rising costs.
The competition has depressed the media giant's stock price, and the only thing that has raised it, interestingly, has been the increasing recent rumors that Tribune Co. would divest itself of some of its holdings:
Tribune shares, like those of other public media companies, have weakened significantly over the last few years, falling 36 percent since 2003, when Mr. FitzSimons took over. But the stock has risen recently as speculation has increased that it might sell some assets, and it shot up 4.4 percent yesterday.
As reported earlier on this site, the corporatization and business consolidation of the U.S. media, which began in the 1960s and caused much anguish among leftist critics and media analysts, was in fact a positive thing that actually increased competition in American mass media. And as I noted in in the post cited at the head of this paragraph, it was always very likely that the consolidation would reverse once it became necessary in order for media firms to make themselves leaner and more effective at responding to competition. This, too, will increase competition and will ultimately be a good thing, as I suggested earlier.

The current de-consolidation, then, is a response to competition and will itself create greater competition.

That is how markets work: brilliantly.

From Karnick on Culture.


Ed Darrell said...

We substitute a system that is legally obligated to strive for accuracy, delivered in an inexpensive, portable package, with a system that is often wildly inaccurate, not bound to any ethical standards, but which requires a thousand-dollar investment to get -- at the expense of several thousands of jobs -- and you call it "brilliant" functioning of the market?

Since when did market economics become a juggernaut under whose wheels the workers and consumers are to be sacrificed?

S. T. Karnick said...

Sorry, but you're wrong. These organizations are bloated, inefficient, and arrogant, and change was due. The market has functioned brilliantly in this case.

tbmbuzz said...

at the expense of several thousands of jobs

In a progressing, capitalist system, how do you think that new (and BETTER) jobs get created? Or to put it another way, what better way is there to create better jobs than by destroying old, inefficient ones? You have fallen for that ultimate socialist fallacy that capitalism is a zero sum game. It isn't.

market economics ... a juggernaut under whose wheels the workers and consumers are to be sacrificed...

Ah yes, another standard socialist fallacy. What system, pray tell, in all of history has been better for the well being and living standard of workers and consumers than the market economics "juggernaut"?

Matt Huisman said...

Well said, Buzz. Not that I've noticed the first of those several thousand jobs disappearing, but if they are, the idea that they were still 'real' jobs would be nothing but a delusion.

Speaking of delusions, I like the phrase 'legally obligated to strive for accuracy'. There's some reassurance for you.