Tribune Company splits TV and newspapers, suggesting focus beats synergy

This post originally appeared as an insight for Outsell’s customers. Republished with permission.
The Tribune Company’s decision to split its newspaper and broadcast properties suggests that newspaper and broadcast cross-ownership is no longer a strategy. Perhaps it never was.
Important Details: The Tribune Company, which has been languishing on the market for years, made a relatively bold move by announcing it would split its newspaper and broadcasting divisions.
This move has been likened to News Corp splitting its newspapers off from its entertainment assets and cable networks, but that’s the wrong analogy. The new Twenty-First Century Fox is comprised primarily of fast-growing, strategically sound, and profitable businesses with national footprints.
But Tribune’s local broadcast properties are mostly declining, or growing slowly, and threatened by the internet, cable networks, and the collapse of the local advertising ecology.
The better analogy is the split of Belo’s newspaper and broadcast properties in 2008, which by Gannett’s purchase of Belo’s broadcast business this year. The split creates a broadcasting business big enough to negotiate credibly with large cable providers for must-carry fees. It also insulates the broadcast business from the risk in the newspaper business.
Implications: For decades, newspaper publishers and broadcasters have chafed under the FCC’s cross-ownership rules, which keep them from owning newspapers and stations in the same market.
Now, Tribune has broken up one of the original, grandfathered cross-ownerships: the Chicago Tribune and WGN. To date, Tribune newspapers and TV stations newsrooms really merged only in Hartford Courant/FOXCT.
Tribune’s split — and Gannett’s acquisition of Belo — signal that even if the cross-ownership rule were lifted tomorrow that broadcasters and newspapers wouldn’t stampede to merge.
The last thirty years have taught us that the two businesses (newspapers and broadcast) have so little in common that merging them would neither lower costs nor increase revenues sufficiently to make it worth the trouble.
Although the internet blurs the boundaries of print and broadcast — news sites must have both text and video — the different cultures and news grammars of the two media make synergies elusive.
That doesn’t mean that local media won’t continue to pursue ill-considered cross-ownership plans and other kinds of horizontal integration.
Meanwhile, each unhappy industry is unhappy in its own way.
While TV broadcasters are bulking up to take on the cable companies, cable companies are merging to take on content providers and governments. It will take all the running broadcasters can do just to keep in the same place. Rents from dominant cable monopolies is a short-term windfall, not a strategy.
Newspapers are discovering that the internet doesn’t owe them a living and are retreating behind paywalls, a tactic reminiscent of the Siege of Leningrad. It’s a bloody holding action that’s effective only if you have a longer-term strategy.
Neither strategy addresses the real question: How do you create local media that will be relevant and profitable in the Twenty-First Century?
Focusing on keeping one’s core property viable while creating digital-native news is a big enough challenge without the distraction of dubious horizontal mergers.