August 8, 2017 Last Updated 3:48 pm

Earnings seasons ends* with a serious thud; Fox News story may risk Murdoch’s Sky acquisition

Morning Brief: Dish Network’s CEO comes out against Sinclair Broadcasting Group’s takeover of Tribune Media, saying the company ‘has a long record of buying a station, hollowing out its talent’

The last (or one of the last) of the big publishing companies reported earnings this morning. So far, the reports haven’t been as bad as I would have predicted. Yes, some of the mid-sized newspaper chains reported pretty horrific revenue losses, but besides Postmedia Network, I haven’t seen one that was actually worse than I would have thought it would be (and the NYTCO report surprised on the upside).

But then Time Inc. reported this morning and was pretty much what I thought it would look like. Revenue and circulation revenue both fell 12 percent, and the company reported a loss for the quarter of $38 million.

But the worst news, if you work at Time Inc., is that CEO Rich Battista will listen to the consultants and begin to cut costs… deeply.

“We’ve been moving with speed and, most significantly, we are announcing today, a strategic transformation program based on a thorough review of Time Inc.’s business. Through this review, we have greater confidence in our path to accelerate the optimization of costs and revenue growth drivers,” Battista said in the earnings report. “We have already targeted more than $400 million of run-rate cost savings, with the majority of initiatives expected to be implemented over the course of the next 18 months.”

The idea is, of course, to pivot to video — something that has become a bit of a source of humor throughout the industry. At the end of any bad news one can say that the answer is to pivot to video.

But one can believe Time Inc.’s CEO Battista when he says this is the plan. After all, that is his comfort zone, not print magazines. The question is whether he can sell off titles fast enough to stem the losses and placate investors. Right now the plan is to sell off Coastal Living, Sunset and Golf magazines, but the problem is that they are a very unattractive set of magazines to sell as a unit because, while they may be under one management team internally at Time Inc., they are located in three different locations. It may work for some publisher, but selling off, say, all the Birmingham based magazines might have been a more attractive option.

* I forgot about News Corp. They report on August 9 after the bell.



The temptation was to write about the Murdoch effort to acquire Sky in yesterday’s Morning Brief, but then the president went on a rampage on Twitter — and, well, he always makes for good copy, right?

Luckily for this morning’s Brief, others decided to discuss the situation with the acquisition — and both stories take the same angle: that Fox News’s Seth Rich story may adversely effect Rupert Murdoch’s effort to secure his long wished for satellite news channel.

The Guardian, Graham Ruddick:

Fox News story sparks calls for further scrutiny of Murdochs’ Sky bid

Ofcom and the government are facing calls to deepen their investigation into whether the Murdochs should be allowed to buy Sky following allegations that Fox News colluded with the White House on a story that contained fabricated quotes.

Douglas Wigdor, a lawyer representing Fox News contributor Rod Wheeler, said Ofcom should call back Fox executives for questioning over the US station’s report on Seth Rich, a murdered Democratic aide who it inaccurately claimed was the source of hacked emails published by WikiLeaks…

…Bradley is expected to announce her decision on referring the deal within the next few weeks. Wigdor and the MPs are calling for her and Ofcom to consider Fox News’s Rich article before reaching a decision.

In a letter to Sharon White, the chief executive of Ofcom, Wigdor said that Wheeler’s allegations “raise serious concerns about the willingness of Mr Murdoch’s media machine to invest resources into furthering a political agenda in line with the family’s own views”.

NPR, David Folkenflik:



The Sky deal is not the only one that has some connection to Rupert Murdoch. In the US, Sinclair Broadcast Group’s takeover of Tribune Media is proceeding and many believe that the ol’ Australian is not happy about it. Neither are others, though it seems highly unlikely that the Trump administration will prevent the deal from going through.

Still, opposition to the deal is growing, though I suppose one couldn’t find a worse advocate for cancelling the deal than Dish Network’s Charlie Ergen, labelled “the Most Hated Man in Hollywood” by the Hollywood Reporter just a few years ago.

FCC Filing:

Petition to Dismiss or Deny of Dish Network LLC

Often, broadcasters have paid lip service to localism, honoring it in the abstract more than in the observance. But Sinclair’s practices – which Sinclair proposes to export to the Tribune stations – amount to a systematic assault against local content…

…Sinclair has a long record of buying a station, hollowing out its talent, and replacing its locally-produced programming with centrally produced content. A list compiled by DISH details a practice of brutal job and cost cuts at no fewer than 27 Sinclair-owned stations. Sinclair has already done this with the stations it acquired from Allbritton and Fisher, and is doubtless implementing the practice now with its recently-acquired Bonten stations. If Sinclair had a station in Bruce Springsteen’s “Hometown,” the Boss might well still “be running with a dime in my hand . . . to pick up a paper for my old man.”

NY Post, Claire Atkinson:

Dish’s Charlie Ergen rips Sinclair in protest over Tribune deal

If you think HBO talk show host John Oliver’s take-down of Sinclair Broadcast Group was vicious, wait till you read Charlie Ergen’s take on the Maryland-based TV company.

While Oliver poked fun at Sinclair’s use of centralized scripted news reports, its “terrorism desk alerts” and the hiring of Boris Epshteyn, a former Trump campaign advisor, Ergen ripped the $3.2 billion broadcast group for making massive cuts to local journalism and for airing fake news…

…“Sinclair’s assault on localism,” including frequently firing investigative units and other “extreme cost-cutting measures,” is not in the public interest, Ergen wrote in the Monday filing.



If it feels like almost all major media M&A deals these days are motivated more by politics than business, look no further than Hungary for confirmation.

Reporters Without Borders:

Hungary: Orbán allies acquire regional press monopoly

Reporters Without Borders (RSF) deplores the purchase of Hungary’s last five independent regional newspapers by oligarchs allied with Prime Minister Viktor Orbán. Their acquisition in the past few days is the latest attack on pluralism in a country where the government keeps extending its control over the media.

Ten months after the independent national daily Népszabadság’s sudden closure last October, supporters of the ruling Fidesz party now control all of Hungary’s regional dailies. Orbán’s latest media “bag” was preceded by the purchase of 13 regional newspapers by an old school friend in December.

“In less than a year, Fidesz has extended its sway over the entire regional press,” RSF said. “This sounds the knell for media independence in Hungary.”

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