Online Ownership - 2006 Annual Report

One of the major 2005 trends in media economics was the acquisition of smaller Internet properties by huge media companies, enhancing their already dominant position. Over 16 months, Scripps bought Shopzilla; Dow Jones bought MarketWatch; the New York Times Company bought About.com; and Gannett, Knight Ridder, and Tribune Co. acquired 75% of the local-news aggregator Topix.net .

Other media companies may be keeping a close eye on the demographic changes that lie ahead for big media. In the late summer of 2005, News Corp. spent $1.5 billion on three Internet companies in just seven weeks, including mySpace.com, which receives 32 million visits in the U.S. each month.17 According to the New York Times, Rupert Murdoch “has been particularly concerned about younger audiences spending less time reading newspapers and watching television, while spending more time online and embracing such features as interactivity and virtual communities.” With the acquisitions, News Corp. will rank fourth in total monthly page views, behind Yahoo, Time Warner and MSN, but ahead of eBay and Google.18

Why has there been such a flurry of activity? Some analysts speculate that the acquisitions are a strategy to compete for a larger slice of the Internet advertising pie, which some fear is quickly being gobbled up by Yahoo and Google. In other words, some traditional media companies feel they cannot afford not to participate in the market right now.

Another reason is that such acquisitions please Wall Street. “Rather than taking small stakes in promising start ups,” one analyst praised Rupert Murdoch’s News Corp., for instance, for “focusing on buying companies outright that are somewhat proven and generating operating earnings.” 19