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The Medium delivers in-depth analyses of the media marketplace’s transformation as creators, tech companies and 10 million emerging advertisers revolutionize the business models for “premium content”.

Each fiscal quarter, The Medium identifies three or four new trends that have momentum and seem poised to play out at a larger scale in 2023. These key trends pinpoint dynamic and constantly evolving developments in the media marketplace that are emerging from incremental shifts or fundamental changes. The bi-weekly mailings analyze these trends as developments emerge in real-time. 

Read the three key trends The Medium will be focused on in Q4 2023. This essay focuses on "In the shift from wholesale to retail models, there are many business models that delight consumers but no single, dominant one."

Author's Note: Due to time constraints, there are no curated Must-Read Monday AM Articles today. Apologies for any inconvenience.

This has been a brutal quarter in broadcast and cable TV advertising. Q4 2023 is shaping up to deliver more of the same. Warner Media CEO David Zaslav went as far as admitting on their Q3 earnings call that “we don't see when this [advertising marketplace] is going to turn”. Warner Bros. Discovery saw linear advertising revenues drop 12% year-over-year, and Paramount Global saw linear advertising revenues drop 14%. Disney CEO Robert Iger reported linear advertising “a little bit stronger than we had expected it would be” but “it's not back as much as we would like.” They did not break out their numbers.

As a result, two questions are starting to grow in urgency:

1. Do synergies still exist between the broadcast and cable assets within these companies? And,
2. Do synergies exist between broadcast and cable assets across these media companies?

The Wall Street Journal reported Disney “has explored potential sales and discussed putting some of its TV networks into A+E Networks, its joint venture with Hearst”. An internal review found that “Freeform and the National Geographic channel are less critical to Disney’s future”, and notably both channels were dropped in the recent distribution deal with Charter. Friday’s CNBC interview with Liberty Media Chairman John Malone (transcript excerpts here) also generated a lot of speculation about synergies between companies. Paramount Global may need a merger partner sooner than others after Malone listed it as facing “very serious distress” because it “didn’t leverage prudently”. 

This emphasis on staff, programming and marketing efficiencies via synergies is the way the media business has always considered “synergy” in broadcast and cable. But, the cost-cutting is starting to appear more drastic as negative cord-cutting and advertising force greater efficiencies in the model across the board.

In listening to Malone’s interview the question is whether his definition of “synergy”—and therefore the market speculation around potential mergers—is too narrowly focused on the economics of cable distribution and not internet distribution.

Key Takeaway

Liberty Media Chairman John Malone argues free cash flow is “dry powder” is to drive future corporate synergies in the linear world. But that seems self-defeating in the DTC world, where that dry powder could drive the smarter build-out of streaming and gaming businesses. This reflects how there are two conflicting rationales for corporate synergies emerging in media.

Total words: 1,200

Total time reading: 5 minutes