Divestiture Restructuring in the Media Industries: A Financial Market Case Analysis

Abstract

Much attention has been paid to restructuring in the media industries. Most of this attention has been directed at mergers and acquisitions and the associated increase in industry concentration. What has been largely overlooked is the extent of restructuring that reduces the size of media firms—divestitures. This article examines several cases of major media divestitures and calibrates the impact of these sell-off and spin-off restructuring events on the value of divesting firms. The analysis uses case studies and event study methodology. Given that the overall role of managers of large firms is to maximize the value and stock price, this event methodology directly measures the impact of divestitures on this ultimate goal of maximizing firm value. Case analysis examines the managerial strategies that motivated the divestiture event to explore the complexities of the divestiture as it unfolded. Event analysis results confirm abnormal returns that have the potential to significantly enhance the value of divesting firms.     

The Bertelsmann AG: An Exploratory Case Study on Synergy Management in a Globally Acting Media Organization

By the multiple usage of immaterial resources across organizational and national market borders, globally acting media conglomerates are able to achieve outstanding synergies. For this reason, they are expected to realize higher margins of profit than smaller-size, nondiversified media firms. However, no empirical evidence has been found for a positive correlation between a firm's size or its presence in many businesses of the media industry and its economic performance until now. Consequently, possible synergies do not seem to be fully exploited in many cases. This article analyzes how to institutionalize and implement synergy management in decentralized media organizations. For these purposes, we first develop a basic understanding and then conduct an exploratory case study on Bertelsmann's approach, which overcomes the stress ratio between corporate coordination and independent action at the operational level. Distinguishing various product types and triggers, this case study renders the process of synergy management more precisely and illustrates how to arrange responsibilities between organizational units. Finally, by relating the results of the case study to the body of literature, we work out patterns of responsibility assignment and drivers of success for strategic integration. In contrast to operational integration, the latter may lead to synergies due to cross-divisional cooperation and business development.     

Find Your Niches: A Guide for Managing Intermedia Effects Among Content Distribution Channels

Abstract

This empirical study examines potential size effects in the US media and communications industry. Motivated by investors’ demand for continuous profit growth, media and communications executives attempt to leverage size effects, be it by growing the core business or by diversifying into other media segments, thereby exploiting cross‐media synergies. However, contrary to conventional wisdom, the authors could not find a general correlation between size and diversification on the one hand and performance on the other hand. The authors’ reason that exploiting size effects in the media and communications industry is far from simplistic and cross‐media synergies may take more time and effort to leverage than assumed. Therefore, research is recommended to focus on the operational level of size effects and their development over time. For media managers, the findings imply that more emphasis should be placed on strategy implementation and operational effectiveness, rather than on sophisticated M&A and growth initiatives.     

Media Concentration With Free Entry

This study develops a free-entry model of competition between media firms, characterizes its equilibrium, and establishes that the industry displays a natural tendency to concentrate. A merger of any 2 firms is strictly profit increasing. Therefore, incentives to consolidate, while maintaining distinct, costly locations (i.e., production units or content), exist. This study distinguishes between post-entry and ex ante consolidation and investigates the properties of the post-consolidation equilibrium. Some firms not involved in any merger may be forced to exit. So, although media mergers may not result in shutting down any of the merging outlets, they still may indirectly affect diversity.     

A Longitudinal Analysis of Mergers and Acquisitions Patterns of Radio Companies in the U.S.

This study examined the trends of M&As (mergers and acquisitions) in the radio industry from 1981 through 2002. In terms of method, the study investigated both MUS by radio firms and M&As targeting radio firms, and compared M&A frequency and M&A transaction values. The result showed that (1) although M&A activities have consistently increased, they have recently begun to decrease, (2) the loosening of ownership regulations prompted more M&A activities, and (3) the passage of the Telecommunications Act of 1996 encouraged interindustry M&As by radio firms, while the flow of investments from other industries into the radio industry was not changed by the Act.     

Shaping the Corporate Perimeter in a Changing Media Industry

ABSTRACT

A constant theme in strategic media management literature is the transformational impact that digital media technologies and deregulation have had on shaping media firms’ corporate strategies. Whilst the role of corporate strategy is to encapsulate a firm’s long-term direction and scope of activities, it will also give a strong indication of how the firm will compete and be positioned in an industry. However, the transformative effects of a highly technological media environment have changed our traditional view of how the media industry is defined, and so developing a strategic recipe for competing in an ill-defined industry becomes more challenging. This paper examines a single media firm’s corporate strategy and perimeter and considers this in the context of a changing media industry. The paper takes a practice-led approach by undertaking a longitudinal analysis of a firm’s acquisition and divestment activities in order to understand its corporate perimeter and by implication the industry or industries where it competes. We argue that by exploring a media firm’s corporate strategy and perimeter over time, scholars will not only be able to better understand the dynamics of media practice and strategy, but also gain an insight into the changing nature of the media industry. The paper concludes that the 'five forces framework' on industry structure, profitability and attractiveness remains a relevant form of strategic analysis that can help media management researchers to conceptualize and understand the evolution of media firm corporate perimeter and the industries in which they compete.     

Market Reactions to Merger,Acquisition, and Divestiture Announcements in the Media Industries

There has been extensive restructuring in the media industries in recent times. This article examines the effects of large media restructuring transactions on the value of firms engaging in such transactions. It considers all media restructuring transactions with a value of over $1 billion between 1997 and 2008—a time period that included 1 of the largest waves of mergers and acquisitions (M&A) activity in industrial history, and was marked in media by transformative changes in the industry due to digital technology and the loosening of ownership restrictions under the Telecommunications Act of 1996 Telecommunications Act of 1996. (1996). Pub. LA. No. 104–104, 110 Stat. 56.  [Google Scholar]. Over that time period, 57 M&A transactions with a total value of $675 billion and 65 divestitures with a total value of $338 billion were identified. This article employs event-study methodology to calibrate the impact of these restructurings on firm value. Over time, the market was cautious about the ability of media firms to launch successful mergers or acquisitions, with losses for the media acquirers larger than those in cross-industry studies. This is even more pronounced when the acquirer is a non-media firm. Alternatively, divestitures yield positive results for both buyers and sellers. Recognizing the impact that restructuring has on firms, this work provides insights for understanding the market evaluation of future restructuring transactions.     

A Structural Analysis of Media Convergence: Cross-Industry Mergers and Acquisitions in the Information Industries

This article analyzes structural changes in the information industries including publishing, broadcasting, film, cable, telephony, software and data processing, and the Internet in the era of "convergence" before and after 1996. The cross-industry network structure was mapped using annual data on mergers and acquisitions among information industry firms obtained from the Journal of Mergers and Acquisitions. A comparative network analysis of these ownership transactions indicated that the consolidating structure of information industries after 1996 was affected by both deregulation and digitization, and that telephone corporations played the most central role in the transformation of the information industries. As well, cable and Internet industries noticeably transformed their industrial relations over this time period.     

传媒产业结构性进入壁垒探析

规模经济、媒介产品的差异、一定的资源、必要的资金量等构成了传媒产业的结构性进入壁垒。结构性进入壁垒具有双重效应,可以维护在位媒介的利益,并形成规模效益;同时,它会排斥竞争机制、限制资源自由流动等。因此,应当辩证看待媒介产业的结构性进入壁垒。     

Chinese Newspaper Ownership,Corporate Strategies,and Business Models in a Globalizing World

This study takes Beijing Youth Daily (BYD), Beijing's largest newspaper in terms of advertising revenue and second largest in terms of circulation, as a case study to examine and analyze how globalization influences the ownership, corporate strategies, and business models of local newspaper organizations in China; and, thus, accelerates Chinese-style capitalism and media convergence. Declining advertising revenue and the loss of readers due to the digital revolution and the availability of multimedia news channels are global challenges that face newspapers around the world. BYD is no exception. In response, BYD has shifted from an exclusively state ownership model to a split or dual-track management model that has allowed foreign capital into the business operations while the party/state still retains ideological control over the news content. BYD has reoriented its corporate strategies and carried out structural reforms, building a media conglomerate via new titles, acquisitions, concentrations, and convergences; and developed its business models with advertising as a major revenue source. All these measures are market-oriented and intended to maximize newspaper profits by pursuing economies of scale and scope.     

新兴产业报道如何以算法思维细分受众

新兴产业已成为中国经济结构调整的最新着力点,未来还将长期持续.但同其他经济报道相似,新兴产业报道领域也一直面临着信息数量与质量两方面供不应求的困境.以今日头条等为代表的互联网新媒体借助创新的推荐算法,实际上遵循了大众传播的本质规律,有效实现了信息供求双方的精准匹配.新兴产业报道的传播者,尤其是传统媒体,亟待深刻认识并充...     

Here Today,Gone Tomorrow: The Vicissitudes of Vendor/Library Relations in the Slavic and East European Book Trade

ABSTRACT

This paper discusses the transformations in the Slavic and East European book trade in the 1990s. Among the challenges these changes pose to Slavic librarians are a profusion of new vendors, very small print runs, and a general breakdown in bibliographic control throughout the region. It argues that vigilant and timely selection is critical in order to obtain materials before they go out of print. Cultivating direct relationships with vendors both in North America and in the region is also required in order to continue to build Slavic collections successfully. It also considers the performance of English language approval plan vendors, electronic vs. print, and the ominous implications that the trend toward mergers and economies of scale hold for library collections.     

传媒业中的规模经济与范围经济

本文针对传媒业运作中的规模经济与范围经济现象进行了阐析。作者先在理论上对规模经济与范围经济进行辨析 ,然后列举传媒业中与单一传媒组织以及传媒集团有关的规模经济与范围经济现象 ;论文最后就如何追求规模经济与范围经济对传媒业提出了建议     

The Value of Freedom of Expression and Information on Countries’ Human Rights Performance: A Cross-National Longitudinal Study

The current study explores the influence of communication variables on human rights protection. The effects of international and domestic mass communication and digital media were assessed among global social, economic, and political factors. The statistical analyses on a sample of 101 nation states over the most recent decade reveal several important findings: (a) top-down, internationally initiated human rights discourse and monitoring were not as effective as bottom-up, domestically initiated human rights dialogues; (b) access to the Internet and access to a mobile phone have different effects on human rights performance, and Internet availability played an especially important role; (c) economic development, political system, and population size are powerful predictors of nations’ human rights performance, but a large population size diminishes the effect of economic development; and (d) economic development can moderate the effect of political context on human rights performance. Theoretical and practical implications are discussed.     

Mergers and acquisitions in publishing, 1984–1988: Some public policy issues

Recently, foreign and U.S. corporations have purchased a significant number of U.S. publishers. If this consolidation continues, a small number of firms could dominate the publishing and information-processing industry in this nation and the world. Albert Greco outlines the pattern of mergers and acquisitions of U.S. publishing firms between 1984 and 1988; describes some theories explaining the increase in mergers and acquisitions; and examines some key public policy issues.     

Applying the structure‐conduct‐performance framework in the media industry analysis

Abstract

This article reviews the application of the Industrial Organization (10) framework of Structure‐Conduct‐Performance (S‐C‐P) in media market research. The constructs and premises of this economic model are restated, and the orthodox economic notions of market performance and the logic that underlies the model are clarified. Alongside these elucidations, this article discusses common conceptualizations and interpretations found in media market studies. Media issues such as content diversity and media concentration, which are often studied through the S‐C‐P approach, are also re‐examined. These deliberations are intended to contribute toward a more consistent framework for the study of media industries and markets.     

Open government data and the private sector: An empirical view on business models and value creation

The release of government data in an open format is broadly expected to generate innovation and economic value. However, despite the emerging public notoriety of this issue, literature is still scarce regarding the commercial application of open government data. The main goal of this study is to understand how firms use open government data to create value. More specifically, we aim to identify what types of use are currently in place and which industries are more prominent in exploiting open government data. Building on the analysis of a dataset of 178 firms that use open government data across various industries in the U.S. we find twelve different atomic models. Additionally, our findings suggest that the way in which open government is used to create value is contingent to the firms' activities. Supported by robust empirical data, we anticipate that our research produces practical insights to entrepreneurs as well as firm managers in deriving value from public datasets, and equip government officials with relevant evidence for advocacy and policy-making.     

Characteristics of Corporate Boards in Single-Industry and Conglomerate Media Companies

Although there has been much research into corporate governance generally, little attention has been focused specifically on issues in media companies. The question is further complicated by the increasing frequency with which media enterprises that have traditionally operated within the industrial context of a specific medium are becoming business lines for media conglomerates and must compete for resources and strategic attention from a board more concerned with bottom-line profitability than with traditional media industry norms. This study examines board compositions of 21 firms with leadership positions in 1 or more traditional mass media industries and compares governance structure and results for those firms that are concentrated in 1 media segment to those that operate multiple media segments. Relations between skills sets associated with different categories of board members (legal, finance, consumer/marketing, service, academic, and other), management influence, and other board demographics to the creation of shareholder value were identified based on financial measures of market value, earnings per share, and dividend levels. The relations between board characteristics and strategic measures of capital reinvestment, asset sales, and acquisitions were also examined. A number of significant differences were identified between single-industry and conglomerate firms in these dimensions.     

The Essential Economic Problem of the Media: Working Between Market Failure and Cross-Financing

The principle economic problem of the media in general is neither recognized nor analyzed in detail. This is because literature on media economics mostly focuses upon the peculiarity of specific media industries, ignoring common characteristics and not discovering the common economic environment. Due to the specific cost conditions corresponding to those of a natural monopoly, media "makers" operate between two extremely different situations-between market failure and economic techniques altering market imperfections into workable markets by using what here is termed as "cross-financing." This economic principle, quite different from "cross-subsidization," constitutes the main issue of the following considerations. This analysis provides a theoretical and empirical framework to discuss three aspects: a) the emergence of latent market-failure situations, b) the conditions for adequate strategies of the media, and c) the abundance of cross-financing techniques. The empirical data concerning cost and financial accounting represent case studies. The theoretical approach takes a closer look at the industrial organization, especially of the periodical print media on a microeconomic, that is, socioeconomic level.     

国际自媒体涉华舆情现状、传播特征及引导策略

本文选取了10种国际自媒体形式,通过内容分析的方法研究国际自媒体涉华舆情现状及传播特征。通过研究,本文发现:近年,中国重大事件频发引发国际自媒体关注;自媒体对中国报道框架与传统媒体相比并无明显变化,涉华经济、文化、科技往往给予正面反应,而涉华政治、环境以及民族、宗教问题多负面反应。国际自媒体涉华内容并非自创,而以转载西方国际主流媒体为主;英美发达国家基本垄断国际自媒体上涉华信息流;发达国家受众形塑自媒体涉华舆论;传统媒体从业人员成为自媒体时代的舆论领袖;在此基础之上,本文提出了针对国际自媒体涉华舆论引导的策略和建议。