Is the Media Conglomerate Dying?

By: Juwan J. Holmes

In April 2022, G/O Media acquired the digital business outlet Quartz, which was generating up to $30 million in revenue annually as a “global business elite” focused startup. This made Quartz the private equity-backed company’s 12th active digital publication.

Currently, the company only runs 5.

In the two years since, G/O has sold multiple publications (even defunct ones) to anyone willing to take them. In March 2023, digital lifestyle blog Lifehacker was sold to Ziff Davis. Nearly eight months later, feminist website Jezebel and the politics site Splinter were sold to the owners of Paste Magazine. In March 2024, Deadspin was sold to a new company run by gambling industry backers, specializing in sponcon and SEO websites. Later that month, G/O returned to Paste and sold The A/V Club to them as well, and announced that The Takeout was being acquired by Static Media, home to dozens of social media-focused entertainment brands. In April, The Onion was sold to a private group of self-proclaimed fans under the company name “Global Tetrahedron.” Today, The New York Times reported that Gizmodo had been sold.

G/O isn’t the only shrinking media company. Our analysis found at least 23 major media corporations that sold or shut down brands or publications since April 2022. This doesn’t include companies that tried to merge or sell their business, conducted layoffs, or made significant cuts to internal projects. It also doesn’t include failed startups like The Messenger or spinoffs of non-media divisions, like Axios did with its Axios HQ product.

If that makes journalism as a business sound like it is in a perilous state, that’s because it is. With less revenue, budgets and staffing are getting smaller across the landscape. If publications aren’t being outright shut down, they’re declining in frequency or expenses spared to improve the content. According to research from the Institute of Independent Journalists (IIJ), at least 80 media layoffs have happened since January 2023, including 30 in the first five months of 2024.

That doesn’t exactly mean media is in full decline, will never recover and we all need to find new work. But, knowing how billion-dollar and multi-million dollar organizations are struggling, how can operators without those resources contend?

I spoke to two media journalists who have covered the industry: CNBC Media Reporter Alex Sherman and “The Rebooting” newsletter founder Brian Morrissey. Their conclusions have a similar analysis: a smaller-staffed, streamlined or niche-focused business is the safest in media. Morrissey told A Media Operator:

It’s a challenged industry that is only going to become more challenged. The loss of ad targeting signals and erosion of traffic from social and search have hit many publishers very hard. That said, this is a particular class of publishers. Many publishers are doing just fine. Those are usually in niche areas, including B2B. But big consumer publishers, they don’t need to be reminded to be concerned.

Sherman said, “I think it’s basically the end of an era of a certain type of digital media company. So if you started in that era [late 2000s and 2010s], generally speaking, your business model was advertising first, and it was based on scale and ‘being big.’ That game is over, so all those companies are screwed. But, the good news, if we take a more optimistic look, is everyone understands that the game is up now, and we’re starting to see the next wave of new media companies, and they have this information now so they know not to build their companies [that way]… other than The Messenger, which was doomed from the beginning.”

While digital-first businesses have declined, broadcasting corporations are struggling to stay afloat as the cable TV business structure collapses faster than expected. Companies loaded with content like radio and podcast platform Audacy and the entertainment-focused Wikipedia offshoot Fandom are selling or shutting down assets.

Sherman recently produced a CNBC documentary, “ESPN’s Fight for Dominance,” chronicling Disney, ESPN’s majority owner (a non-controlling portion is owned by Hearst), and its struggles to maintain the sports brand amid expensive cable fees and rising sports rights costs. He found that Disney and other media conglomerates that he regularly reports on are trying to navigate the changes to traditional business models.

“They will try to keep it going for as long as possible. They have been trying, you know, but all of these companies have mixed messages,” he said. “There’s not really a clear strategy… because there’s two diametrically opposed incentives going on at the same time, which is: you want to keep the thing going for as long as possible because it’s a really good business model and it’s worked. But, Wall Street is pushing you toward growth businesses.”

With investors disinterested in traditional media businesses, companies are turning to the M&A market, leading to conglomerates openly shopping certain brands—or their entire organizations. But that path is not a guaranteed success, either.

“Big publishers are in triage mode. They’re looking to cut costs and prepare for who knows what else is to come with AI. So the M&A [deals] will be consolidation in the service of efficiency,” Morrissey said.

In April 2022, Discovery finalized its acquisition of Warner Media, creating Warner Bros. Discovery. Despite owning revered brands like CNN, HBO, and DC Comics, the company’s stock has fallen. It has also cut several of its divisions’ assets. It almost immediately pulled the plug on CNN+, recently shut down Rooster Teeth (while selling off its podcast network), and told stakeholders at regional sports networks that it will exit that business entirely. In addition, WBD may lay off more staff, having already cut thousands in the last year, and lose one of its most prized possessions, which is TNT Sports’ NBA broadcasting rights after 2025.

Overall, the merger of these two already massive media corporations hasn’t improved its immediate outlook. What does that mean for others in media seeking to acquire their competition or assets? Sherman said:

I think it was yet another in a fairly long line of big media deals that didn’t work. You can trace it back to Viacom and CBS merging, or even before that, Scripps and Discovery merging, or Fox and Disney merging. All of those came before Warner Bros. Discovery. Every one of those deals was a giant failure. There was just massive money, shareholder value lost after those mergers. Warner Bros. Discovery has been yet another one like these big media mergers [that] just have not worked. The reason they haven’t worked is you can get cost synergies out of them, but you can’t put two things together that have the same declining business model and come up with a winning company for Wall Street.

That doesn’t mean media M&As won’t happen in the future, but they aren’t likely to get quick shareholder approval. Sherman points to WBD’s consideration of merging with Paramount Global, another conglomerate looking for new ownership despite its business woes.

“You put those two companies together, you add even more debt to the balance sheet,” he said.

Many media businesses’ next hope is an acquisition by Big Tech. Sherman calls it the “option A” for many conglomerates: “They get kind of absorbed into this tech company that gets to use all their assets to build up their own relatively new media business. So, like we saw Amazon buy MGM a couple of years ago. It would be sort of like a similar deal to that.

“The problem is that regulators, right now, just almost certainly will not allow that to happen,” he said. “Basically, these tech companies are powerful enough. The idea that they would be doing, you know, enormous 30-billion-dollar-plus deals, to make them even bigger and more powerful is just not going to fly in the Joe Biden, [FTC chair] Lina Khan administration.”

“It may be a moot point to some degree,” Sherman posited.

M&A deals are rising in the first quarter of 2024 after a downturn in 2023. However, there’s little activity in media. Still, businesses are struggling to find buyers in a landscape full of sellers and a general economy full of instability. One notable situation occurred with Forbes, which was supposed to be bought by tech billionaire Austin Russell and Russian investors in 2023, but the deal fell through when Russell’s investors didn’t provide the funds on time.

“It’s almost like a natural disaster where, you know, like you have sort of like a tornado that wipes out an area of land,” said Sherman. “After that… allows for regrowth.” Sherman went on to say:

We’re not really in the regrowth stage yet. We’re still sort of in the wreckage stage, but the hope, at least, is that after the wreckage, you can start to build back better, to quote Joe Biden, and, you know, some of these smaller media companies will get larger in time because they’ll demonstrate that their business model works. But we’re not really there – yet. Right now, we’re still [in the phase where] you know, if you want to make a successful media business, like, hire six people and stay that size for a while.

Where does that leave the current digital-first conglomerates? Some are reducing their workforce and redistributing resources. For example, Vox Media, which owns multiple media brands including SB Nation and Group Nine Media in addition to its namesake website, has quietly shifted some of its assets. It gave some of its ad inventory sales duties to Penske Media (which is now Vox’s top investor), shut down SB Nation’s podcast network in April, and last year spun off NowThis, a social media-heavy news network now owned by a nonprofit. It has also had layoffs and brands leaving, such as LGBTQ blog Outsports (acquired by Q.Digital) and Recode Media, the famed blog and podcast created by Peter Kafka (which are both being resurrected under Axel Springer-owned Business Insider and Morning Brew).

Morrissey said the era of digital expansion is over. “The big competitive advantage is in those with lean models with low cost bases. This is not the time to be building out a big infrastructure that could be obsolete soon with AI. The world doesn’t need another The Messenger, it might not have ever needed one.”

Morrissey says that media conglomerates “need to rebuild a business model [from] when tech platforms control[led] the distribution. These companies were never direct to consumer. They need to pull off that shift or be suppliers to the distribution chokeholds.”

The fallout for companies like Buzzfeed Inc. and Vice Media is a lesson for all media operators. “You can still build a big media business, only it’s not likely to be as big as was once thought and it will be a collection of niches,” Morrissey said.

For new startups, that’s the more certain path. Morrissey and Sherman cite Puck News and Semafor as examples of media companies making strides without huge mastheads. Morrissey also mentions Punchbowl, while Sherman named Axios, The Athletic and The Information. The New York Times has also highlighted the success of these ventures as a sign of ‘hope.’

“It’s not about getting big anymore. In fact, it’s about staying small,” Sherman said. “The bad news is, it’s about staying small. So if you want to get into media and you’re looking to get hired, well, the jobs aren’t there like they were before, because all of these new media companies are not hiring like they were before.”

There are some silver linings, as a few major media corporations are still doing well enough to consider acquisitions or avoid bleeding assets or mass layoffs. Penske Media, the parent company of Rolling Stone and Variety, has rapidly expanded several brands and raised its stake in Vox and others. Dotdash Meredith’s revenue was up in Q1 2024 and it has shrunk its operating losses.

For media brands once highly valued by investors or overpaid for by other companies, “Unless there’s like a fan base for it, you know, some of those brands are going to shut down completely,” said Sherman. “We’ve already seen it. That will keep going, and – this is going back to the tornado metaphor – they will be replaced by brand new companies, with better business models.”

At best, some brand seekers may buy the names “sticky enough” to survive business death, like Sports Illustrated and Yahoo’s owners are attempting, but it’ll be “a tough road ahead,” Sherman believes.

Media consolidation is not fully dead, at least not yet. However, as Sherman said, “That is owner specific. Very rare these days, but there’s a lot of reasons to like the business… if you’re a billionaire. So if you’re a wealthy individual, I could see you wanting to be a media empire builder. This is a story that has gone back, like, 150 years in this country where there’s really wealthy people that are media empire builders. So, like, I don’t see that changing.”