5 Reasons Why 2016 May Be the Most Chaotic Year Ever in Media

#1-Rich Guys

The new “future” of newspapers in the top 25 is that billionaires rescue the newspaper and leverage the newspaper’s assets for any number of reason. It is not in their nature to take a hands off approach - these guys are micro managing distribution vendors and loading times on mobile. Here are three of an ever growing number.

Boston Globe: Billionaire, investor, sports team owner John Henry - who also is a part owner in the Boston Red Sox, started selling off assets of the Boston Globe and is selling the plant and real estate. He has made investments in the newsroom. Henry just stubbed his toe when he went to save money on the outsourced distribution structure and the new distributor had significant delivery problems. A reported 15 to 20 percent of subscribers has issues. Late in 2015, the paper laid off a reported 45 in 2015. Estimated Net Worth: $2.1 Billion

Las Vegas Review-Journal: Billionaire, gaming tycoon and GOP Super PAC Funder Sheldon Adelson - According to Media expert Ken Doctor in his recent column, “The company that runs the Las Vegas Review-Journal is taking steps this week to repair its reputation after a series of reports of sketchy-seeming journalistic practices related to the recent sale of the newspaper to casino magnate Sheldon Adelson.” The company that is going to run it — GateHouse Media which also owns the Worcester Telegram and the Providence Journal. Estimated Net Worth: $28.9 billion

Washington Post: Billionaire, Jeff Bezos — the CEO of Amazon pledged to be handoff when he bought the venerable newspaper with a legacy of breaking Watergate, but he is now knee-deep into the day to day.

When Washington Post owner Jeff Bezos received an email from a reader complaining about the time it took for the mobile app to load, he immediately fired off a note to the newspaper’s chief information officer. The message was simple: fix it. “We looked at the problem and I told Jeff I thought we could improve the load time to maybe two seconds. He wrote back and said, ‘It needs to be milliseconds,’” said Shailesh Prakash, who heads the Post’s technology team as chief information officer. “He has become our ultimate beta tester,” reported the Wall Street Journal. Estimated Net Worth $46.9 billion
 

#2-TV Merger Mania

Hold on to your hat to follow the bouncing merger ball in local television mergers. 

In New England, the three stations are owned by Media General are Providence’s WPRI-12, 22 News in Springfield and News 8 in Hartford. Media General, who just bought LIN Media was planning to buy Meredith Group, but its investor NEXSTAR threatened a hostile talk over to block the Meredith deal and is now buying Media General.

As the financial world reported yesterday a deal is in full bloom with lots of complications, here is what the New York Times reports, “Six months ago, Media General rebuffed a takeover offer by the Nexstar Broadcasting Group. A few weeks later, Media General opted instead to acquire Meredith Corporation. But Nexstar was not about to let Media General get away, so it made a higher bid in late September, and then a third bid in November, both of which Media General rejected. The last bid, though, intrigued Media General enough that it said it would be willing to negotiate with Nextstar, hinting at a potential future combination.

On Thursday, those discussions appeared to reach a point of agreement. Media General said it had negotiated a deal in which Nexstar would acquire it for cash and stock for about $2.3 billion. 

If you think TV mergers, plus more debt, plus more cuts to staffing are done - guess again.

#3-The Number TV is Scared Of and Should Be

Local and network TV are losing the most important viewers at an alarming rate.

The number of hours watching traditional TV by 18 to 24 -year-olds has dropped from 21 hours and 45 minutes a week to 15 hours and 30 minutes from 2013 to 2015. This number points to a massive shift in behavior and a loss of the next generation of viewers.  Where did they go? Netflix and other forms of streaming. The behavior is so different that it will be difficult for ABC, CBS, BBC or Fox to get them back. What happens to PBS - will they know it ever existed.

According to Media Post, “Nielsen’s most recent “Total Audience Report” indicates that Americans aged 18-24 watched a weekly average of 15-and-a-half hours of traditional TV during Q3 2015. That represents a year-over-year decline of a little more than 2 hours per week. In other words, 18-24-year-olds as a group went from watching about 2-and-a-half hours per day during the third quarter of 2014 to a little more than 2 hours and ten minutes per day during Q3 of this year.”

#4-All is Not Happy in Digital Either

While Digital news is still growing significantly there are some hiccups. According to data released by digiday, grew from Nov of 2013 to Nov 2014 by 43% and monthly uniques decreases by 1 percent in the following 12 months. 

Mashable which was up during the 2013 to 2014 period by 19 percent did pick up steam and grew by 32 percent in the following 12 month. Business Insider, Refinery29 and Quartz all had big 2013 to 2014 periods but them were hit hard and saw slower growth in those next 12 months.

Similarly, legacy media like the New York Times are straining to find new ways to grow their digital dollars. 

“The digital reader revenue number passed the test, coming in at 14% year over year, for the quarter. There, the Times saw its greatest quarterly growth in three years, adding 51,000 to a new total of 1,041,000.

The digital ad number didn’t pass muster. In fact, digital ad revenue flagged for 3Q, down 5.0%. That might seem like an alarm, but it might be a blip.” writes Ken Doctor. 

#5-Big Radio in Big Trouble

As GoLocal has reported in the past:

The two biggest radio companies in the United States are on the verge of massive restructuring or bankruptcy, as they each have billions of dollars in debt and little chance of managing the building financial obligations.

How bad is the situation?  According to one leading radio analyst, the problem is catastrophic.  “$20.5 billion in debt for iHeart — billions more than the city of Detroit when it went bankrupt.  As I have been reporting, the venture capitalists are circling the carcass for a 2017 bankruptcy.  At Cumulus, new CEO Mary Berner has done nothing new except hire another person from outside the industry…They want to go bankrupt and her experience taking Readers Digest into Chapter 11 is her qualification to be CEO,” said Jerry Del Colliano, Publisher, Inside Music Media.

iHeart radio (formerly Clear Channel) and Cumulus are both facing in economic turmoil and those two groups combined own massive numbers of stations across the United States

“iHeart has more debt — unplayable, at double digit interest rates and the junk bond markets just crashed.  Cumulus has about $3 billion of debt that will have to be refinanced. Both are in an industry that is trending down.  Break even is the new growth in radio.  They’re both done,” said Del Colliano.

While iHeart Radio may be upside down by billions, its CEO Bob Pittman is still enjoying the fruits of his office. The former head of MTV's perks are significant. "SEC filings show Pittman, a perennial at the Burning Man festival, will get a $7.5 million golden parachute when he exits. The documents also show that his corporate perks include $900,000 in aircraft usage (Pittman is an accomplished pilot), $160,000 for security and $140,000 in car services," according to the New York Post.

In the past year, Cumulus has lost 90%+ of its stock value and is now trading at $0.30 per share. iHeart's stock has dropped from a 52-week high of $8 per share to $1.01.