Hot Topic - Bertelsmann/RTL Group
Building scale has long been the favored business strategy. Bigger is, quite naturally, stronger. Smaller is just a lot of work. It is just the same for the media world as, say, the oil business or, in recent decades internet technologies. Bigness has its detractors; enemies even. This has only grown with big associated with bad, particularly super-big, particularly in popular headlines. Empirical evidence is far less incriminating.
Audiovisual rules in most countries have been set in stone for ages. More precisely, regulatory levers meant to keep a thumb on operational, commercial and financial behaviors date from the pre-digital era. Early deregulation efforts, largely, did not provide the desired effect of giving bracing control to broadcasters. The internet arrived. Mobile phones arrived. Netflix arrived. Consumers went with the flow.
Big media companies take their merger and acquisition activities quite seriously. There are not spur of the moment decisions. Legions of lawyers, accountants and senior managers are involved. Delivering a good deal for the boss can result in a hefty bonus. If it doesn’t work out, well, there’s always work from home.
Business strategies generally follow one of two basic forms. There is the slow and plodding make-no-mistakes kind. On the other end of the spectrum we have go-fast-and-break-things. The later is heralded as the way of the future, digital everything, appealing to the attention-deficit times. The former is seen as just a relic of the last century, soon to fade away or be gobbled up. There are many examples of each within the media world. In the middle there is always rearranging lines on the spreadsheet.
Of course, mergers and acquisitions are heating up again in the media world. It’s a cyclical thing. Some shareholders eye expansion in this time of consolidation. There are bargains to be had. Others are ready to cash-out. Hold on to your hats.
The media world is no place for the faint of heart. It is also, it seems, no place for the small. Scale, of course, has long been touted as the greatest of all competitive advantages. That logic fell out of favor as the digital revolution arrived, further excited by private equity fund managers. Agility became the favored flavor. Being speedy and clever is still seen as beneficial but nothing beats raw brawn.
There have been rumbles, off and on for some time, concerning the effect of Brexit on the UK’s media sector. Brexit is, for those sleeping soundly for the last couple of years, is the popular handle for the process of the UK leaving the European Union (EU). It began officially this week and will be negotiated over the next two years, perhaps longer.
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