While Rupert Murdoch’s News Corporation US$80 billion takeover bid for fellow US media giant Time Warner has been rejected - for now - there is no doubt the future ownership of this historic company is in play.
For Murdoch personally, it would almost certainly be his last big media takeover bid and there appears to be an element of personal mission about the plan. But the bid should also be seen as a defensive play against the seemingly inexorable rise of companies such as Google and Apple.
All media industries have dramatically consolidated their ownership in recent decades, as the rise of digital platforms and the convergence of media forms has undercut traditional sources of profitability.
For News Corporation, a takeover of Time Warner would consolidate its position as one of the few giant global media content businesses. Alongside the more high-profile news offerings such as CNN and Time magazine, Time Warner is also behind Home Box Office, Warner Bros movies, DC comics, and the digital platforms of the US national Basketball Association and Major League Baseball. For a teenager or 20-something, the company is more likely to be known as the home of Game of Thrones as for CNN or Time.
Similarly, while we may think of News Corporation as being about newspapers and cable channels such as Fox News, its bigger and more profitable offerings are in its entertainment division, with blockbuster films such as Avatar and the X-Men franchise, and TV shows such as The Simpsons, 24 and Modern Family. Both News Corp and Time Warner are major players in US sports broadcasting.
News Corporation formalised the division between its print and entertainment media businesses in June 2013, when it restructured around two companies: 21st Century Fox, which consists primarily of media outlets, and News Corp, which manages publishing assets.
A takeover would cement News Corp’s place alongside content companies such as Disney. But the bid should also be seen as a defensive play against structural forces sweeping the media industry. Power has shifted decisively from the big media content providers to content aggregators and those who control digital distribution platforms. As Robert Chesney has observed in his 2013 book Digital Disconnect, the biggest US corporations are now Apple, Microsoft, Google and Amazon, as well as IT companies such as IBM, Intel and Cisco, or network service providers such as AT&T, Verizon and Comcast.
Indeed, Murdoch himself argues the takeover needs to be supported by investors and regulators to maintain a strong bargaining position for the media content industries in their dealings with the platform providers and content aggregators. The days in which “Content is King” was the mantra for the internet have long passed.
Any move that suggests Murdoch will be able to enhance his media power will automatically have its critics. But the bid is likely to be less contentious in the US than it would be in Britain or Australia. Unlike Comcast’s takeover bid for Time Warner Cable, it has few implications for threshold issues such as net neutrality, and there is a history in both companies of dealing with their news and entertainment businesses quite differently. It has been argued that anti-trust provisions would be unlikely to be triggered by such a merger.
The biggest implication of the bid is probably for the future of cable news provider CNN. Once the unquestioned giant of global 24-hour news channels, CNN now struggles both domestically and internationally. In the US, it has been caught in the crossfire of growing political polarisation, with Fox News being the preferred service of the political right, and MSNBC providing the key counterpoint for political progressives. Internationally, CNN is challenged for leadership by a plethora of state-funded broadcasters, that include BBC World and Al-Jazeera, but also the “soft power” players such as China’s CCTV and Russia Today.
A merged News Corp-Time Warner entity would face questions from the Federal Communications Commission about controlling both CNN and Fox News. Moreover, it is hard to see the two co-existing at an organisational level, since each defines its own mission at least in part in opposition to the other. For CNN, its most likely future would be to merge with one of the major TV networks, such as ABC or CBS, in order to better pool resources between a dedicated news channel and a broad appeal network that nonetheless has news as a core activity.