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Thursday, August 14, 2008

Media Deconsolidation (Part 23): Cox Selling Most of its Newspapers
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My ongoing media DE-consolidation series represents an effort to set the record straight regarding one of the leading myths about the media marketplace today: the notion that rampant consolidation is taking place and that operators are only growing larger and devouring more and more companies.

Nothing could be further from the truth. Over the past 3 to 5 years, traditional media operators and sectors have been coming apart at the seams in the face of unprecedented innovation and competition. The volume of divestiture activity has been quite intense, and most traditional media operators have been getting smaller, not bigger. "Traditional media's numbers are shrinking," argued FCC Commissioner Robert McDowell in a recent speech. "The ironic truth is," McDowell continued, that "in many cases, media consolidation has actually become media divestiture. Companies... have been shedding properties to raise capital for new ventures."

And so that trend continues today with the announcement from Cox Enterprises that it will be selling almost all its newspapers. According to the The Atlanta Journal-Constitution:

Cox Enterprises, the Atlanta-based media conglomerate that built a multibillion-dollar business from a single Ohio newspaper, announced Wednesday that it plans to sell all but three of its newspaper holdings. The company will retain flagship newspapers in Dayton, Ohio; West Palm Beach, Fla.; and Atlanta -- including The Atlanta Journal-Constitution -- but sell dozens of daily and weekly newspapers in Colorado, North Carolina and Texas. Company officials did not disclose an asking price for the properties but said revenue from the sales will be used to pay down debt and free up capital for other investments. Cox will also sell Valpak, the company's nationwide direct-mail advertising division, officials said.

Sandy Schwartz, the Cox president over the newspaper division, said the company has no plans to sell its newspapers in Atlanta, Dayton and West Palm Beach, which are moving aggressively to contain costs and establish strong online readerships. The sale comes amid slumping revenues and declining values for newspapers across the country as print media lose market share to the Internet.

Once again we see how life in the newspaper business can be a turbulent affair with grim long-term growth prospects. Nonetheless, let's not lose sight of the fact that traditional media operations are once again growing smaller, just like all the media critics supposedly want. So, I eagerly look forward to the press releases from Free Press and Media Access Project noting that fact. But something tells me I shouldn't hold my breath in anticipation of those statements since we know the media reformistas have a far more ambitious and radical "reform" agenda in mind.

posted by Adam Thierer @ 11:45 AM | Mass Media

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