Top 5 Media and Entertainment Trends for 2013: No. 1, Consolidation
I’ve been at Acquia now for five months now as Media Entertainment and Publishing Director. In this role, I enable and grow Acquia's engagements with the various segments of these industries including music, TV, filmed entertainment, book and magazine publishing, broadcasting and digital media. In order to do so, I spend countless hours studying the industry. During this period, I have identified five key trends in content management that apply to this media vertical. While these trends directly impact the content management industry, they will, more importantly, change the way consumers access digital media.
I’ll examine these five trends in this blog series. The first trend I’m blogging about isn’t the sexiest, but it’s one of the most important: consolidation – particularly in the television segment.
I’m talking about companies that own groups of local TV stations in various markets across the U.S. This consolidation trend means this past summer I.T. and digital media teams at these companies were hard at work, attempting to consolidate their CMS systems and web frameworks. We notice even within single local TV station groups, there can be up to three different CMS systems in place. Imagine when you try to merge two of these TV groups – you could be talking about trying to integrate as many as four to six CMS systems.
What’s driving the consolidation? We hear from analysts that by consolidating larger TV station groups can lower the fees they have to pay to cable TV operators to have those company carry their signals.
While the analysts are talking about cable TV fees, we think about the impact the consolidation of local TV station groups has on content production. A larger scale network of local TV station allows the stations to share more unique content across their multiple TV news web properties.
For example, a national news story could break in Raleigh, North Carolina. If the newly merged company now has a station in Raleigh, they have the exclusive content to send out to their affiliates, and they could also syndicate a live stream. From a monetization perspective, a larger digital network of sites focused on local markets extends a media company’s offering to national and regional advertisers.
Just how much recent consolidation is there in this space? On June 6th 2013, Media General bought Young Broadcasting, increasing its local TV station ownership from 18 to 30, a deal estimated to be worth $550 million. Just a week later, Gannett, known just as much for its newspapers including the flagship USA Today, expanded its TV station group becoming the 4th largest in the U.S. with the $2.2 billion purchase of 23 more stations from Belo Corp. Then on July 1, Tribune bought Local TV LLC, acquiring 19 more local TV stations in 16 markets, for $2.72 billion.
We thought at this point there would be a pause in the consolidation spree, but on July 29 came another billion-dollar deal: Sinclair, the nation’s largest independent owner of TV stations announced the acquisition of 8 local ABC-TV stations from Allbriton Communications. Sinclair’s deal follows the April $373 million purchase the company made for 20 stations from Fisher Communications.
That’s a total of about $6.8 billion of TV station group acquisitions in just four months.
We have studied the industry specific CMS vendors servicing the web sites of these now merging local TV station groups: They include Datasphere, Worldnow, and Broadcast Interactive Media, and there may be others we haven’t yet uncovered. In addition, there some Open Source solutions such as Wordpress that are following this trend. Again, sometimes you’ll find a single company that has 2 or 3 of these vendors on different TV stations with the group. There are other local TV station groups that have yet to consolidate, some of those sites use a CMS from a company called Internet Broadcasting Systems.
The CMS systems I mention are tailored specifically for the workflows of TV station web sites. If you then look at the broadcast radio industry there is yet another set of CMS vendors focused on radio – these include companies like InterTech Media and Triton Digital Media. Another CMS company, NewsCycle Solutions, specifically addresses the newspaper industry.
The special needs of TV, radio and newspaper websites had led to the expensive industry specific legacy systems that now must be untangled as consolidation moves ahead. If $6.8 billion in TV station group consolidation just happened, what will be the expense of integrating or jettisoning and transitioning from the various CMS systems in place at these companies?
Where is open source Drupal CMS being used in the local TV station owner groups? At Gannett Broadcasting’s D.C. area TV station, WUSA 9 CBS, a network of 23 local neighborhood focused sites have been built off the WUSA9.com domain. Open source can help support innovation, and create an easier path for future change and consolidation.
As I follow the continuing story of consolidation, I’ll report back on the choices some of these chains make in selecting a CMS to consolidate on. In the meantime, my next blog will take a look at the second trend in the media vertical – the amazing importance and growth of video consumption in 2013. Tune in next week.