Details published by traditional media ventures this week have provided quite a few interesting data points.
Sinclair has acquired Disney’s sports networks for $9.6bn. Disney wrote its investment value in Sinclair down by $353mn, which is almost nothing. Sinclair had a valuation worth $5.7bn in 2016.
The NYT has increased its subscriber count by 223000 members online. It is now valued at $5.6bn, at 175% increase in 3 years.
Netflix is currently worth $157bn. Meanwhile Warner Media has lost all its top talent. Streaming service Cheddar was sold for $200mn whereas Pluto, another streaming service was sold for $340mn. However, Mic was a major failure, sold only for $5mn.
In tech industry, an exit of a company at $200mn-$300mn is viewed a failure. Many major digital media providers are struggling how to turn into multi-billion companies.
However, why are sports networks and NYT still growing?
Reasons include the fact that only the model of distribution has changed nothing else. Customers are after the same media as always, only provided in a platform that’s useful to them.
People don’t value digital-based media companies any more than the others. If that was the case, these companies would have been worth more.
After the introduction of the Internet, traditional media lost its advantages for a short period of time. However, they are back with new techniques to increase reader engagement and reducing production costs but wind up sacrificing quality.
The most prosperous companies have maintained quality while also changing their distribution strategy. Paywalls have contributed enormously to this, with the NYT having over 4.5M subscribers who pay for a subscription.
Traditional companies have really suffered because they weren’t able to handle the pace of change in distribution tactics, earning them less money than usual. Another reason for this paradox is the fact that media business can die out slower than expected.
Sports networks are still dying due to people cancelling cable TV. However, Sinclair estimates that the RSN acquisition would boost revenue to $6.7bn and turn out to be quite money-making. While over 8% of households have cancelled their cable TV subscriptions and over 99mn households still pay for it. That kind of hold is not that easy to go away.