Tribune Company (NASDAQOTH:TRBAA)’s announcement that it is considering a sale of its newspaper business sounds like a good plan. It would be getting out of a struggling industry and working on growing its healthier division. However, that begs the question of how long television stations can fend off the effects of the Internet?
The Decline of the Newspaper
The Internet has nearly destroyed the newspaper business, with the slow decline of such storied brands as The New York Times hard evidence of the disruptive technology’s impact. Indeed, historical strongholds in advertising were quickly taken over by companies like Google Inc (NASDAQ:GOOG), Craig’s List, and Yelp Inc (NYSE:YELP). It’s been ugly for newspapers.
Everyone’s Getting Out
So The New York Times selling its Boston Globe assets to focus on its namesake paper is a good idea for a dying industry. Tribune Company’s announcement that it is considering a sale of its newspaper business altogether is an even bigger statement. Focusing instead on its more than 20 television stations does, indeed, sound like a good plan.
Video content has been a driving force for years. People simply enjoy watching the media they consume. So, in the end, Tribune should end up a stronger company. But for how long? It will own television stations, but it won’t be creating the content. It will just be distributing the content as a middle man of sorts. The Internet is increasingly looking like a nationwide competitor on that front.
Two cable of recent years are noteworthy in this regard. The first was Time Warner Inc (NYSE:TWX)‘s decision to shed its cable assets to focus on its content generation businesses. This has been a good decision, since the value of content seems to be increasing as more and more companies look to distribute both old and new material. Note, too, that Time Warner plans to spin off its magazines to get closer to a pure play video content company.
Interestingly, Comcast Corporation (NASDAQ:CMCSA) buying the half of NBCUniversal that it didn’t own from General Electric Company (NYSE:GE) looks like a cable company beefing up to be what Time Warner is moving away from. While this is true, Comcast Corporation (NASDAQ:CMCSA) lacked the compelling content that Time Warner has. With the purchase of NBC it got premier content in one swift move.
With the cost of content increasing because of the aggressive efforts of companies like Netflix, Inc. (NASDAQ:NFLX) to fill out online media services, Comcast Corporation (NASDAQ:CMCSA) looks set to save money it might have otherwise spent to buy content. It will also have the ability to sell its treasure trove of content. That should make the deal a winner in the changing media space. And someday, it might follow in Time Warner’s footsteps and become a media focused company, too.