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Illustration: Rebecca Zisser/Axios
Local media consolidation and the rise of paywalls, both meant to combat a bleak ad outlook, could deepen the growing divide between America's information consumer haves and have nots.
Driving the news: Nexstar Media Group has agreed to acquire Tribune Media for $4.1 billion, as first reported by Reuters and confirmed by Axios' Dan Primack. This would make Nexstar the largest owner of U.S. local television stations.
Why it matters: That gap is often defined by wealth and geography, rather than the public and reader interest.
"Increasingly, journalism serves as a powerful force for exclusion, for keeping quality information away from those who need it most, for discouraging anyone but the richest, most educated citizens from participating in the public conversation."— Rodney Benson, chair of NYU's Department of Media Culture, and Communication
The big picture: Nexstar's acquisition comes on the heels of changes in decades-old media ownership rules that apply to broadcasters and newspapers, which are combining with new types of competition in news and entertainment to creating incentives for consolidation.
Between the lines: Benson says finding ways to create a plurality in types of news ownership will help to decrease the growing information gap in the U.S.
The bottom line: There's a real news and information divide between rural and urban/suburban communities as well as between the poor and rich in the United States.
Go deeper: We break down these trends in our deep dive on the Digital Divide.
Netflix Chief Content Officer Ted Sarandos says his company invests in more original programming so that it doesn't have to be reliant on program suppliers, writes Stephen Battaglio for The L.A. Times.
Why it matters: Most major distributors need to fight for scale, which means that for every good piece of content they produce, many more pieces of less quality content (especially for TV) is also produced, as The Economist explains.
The good news: A slew of new laws and market conditions are beginning to swing the pendulum the other way — albeit slightly — and return at least some power back to original content owners.
Google and Facebook, often referred to as “The Duopoly,” were responsible for roughly 75% of all digital advertising growth last quarter in the United States, according to Brian Wieser, Senior Advertising Analyst at Pivotal Research.
Between the lines: Wieser notes that if his estimates are correct, digital advertising that did not go through Facebook or Google performed reasonably well during first half of 2018, growing by around +18%, or ~$1.5 billion.
The bottom line: It’s unlikely digital news publishers are the ones seeing those gains.
Data: Multiple sources, Image: Sara Fischer
The cheap sale of Mic is bringing a lot of press attention to VC-backed media companies, highlighting the risk that comes with raising lots of money to support ad-driven media business models.
Valuations: Digital media companies tend to sell for anywhere between 2.5x and 9x revenues from the previous year, or a little higher in terms of EBITDA.
Go deeper: See the chart as a list
For decades the primary source of revenue for media companies was advertising, but competition from technology companies and a more privacy scrutiny are pushing most media companies to explore alternative forms of revenue.
Why it matters: Most media companies have to unwind years worth of sales and product infrastructure to make way for the transition. Not all will survive it.
Between the lines: Most companies are looking for creative ways monetize their owned and operated channels and content, but the transition away from advertising and Facebook traffic has been difficult.
TV networks are too trying to build their own streaming services as more ad dollars float to big tech, but the competition against streaming giants is tough.
The big picture: There's a legal case for getting out, too. Advertising used to be an easy business to maintain from a compliance perspective, but new privacy laws and an increased focus on transparency are forcing publishers to pay closer attention to their supply chains.
Be smart: Most companies are in the experimental phase, and haven't yet figured out what their long-term strategy for growth will be, if there is one.
Oath, the Verizon media unit that houses digital brands like Yahoo, AOL and HuffPost, has agreed to pay $5 million to settle charges from the New York attorney general that the media company’s online advertising business was violating a federal children’s privacy law, per The New York Times.
Why it matters: These are examples of how major internet companies are grappling with an online world that needs to be safeguarded for children.
"This announcement (the ad settlement) highlights how all the mainstream adtech players (e.g. AOL/Google/FB) are struggling with the fact that their platforms, built originally to leverage personal data on adults, are now being overrun by children who need the exact opposite strategy."— Dylan Collins, CEO SuperAwesome, the 'kidtech' platform used by the majority of the kids industry for safe digital engagement
By the numbers:
Between the lines: Researchers and tech companies are increasingly collecting data on kids' usage of platforms to help correlate long-term cognitive effects, per Axios' Marisa Fernandez.
The big picture: Platforms like Facebook and Google have tried to introduce kid-friendly alternatives, like YouTube Kids and Messenger Kids, but regulators and parents are still wary of the harmful effects of internet exposure.
Go deeper: The Wild West of children's entertainment
A potential recession, combined with increasing regulatory threats for some of the biggest tech companies, foreshadows a difficult 2019 for Silicon Valley.
Why it matters: The biggest tech companies have already raked in billions of dollars in profits and benefited from major tax cuts that aren't going to be repeated, so next year isn't likely to be better for them financially. They've also been dogged by scandals that have left many questioning their positive role in society, and if on top of that the economy starts to slip, 2019 could be worse.
"People look for scapegoats in a bad economy. And with big tech already on its heels, a downturn probably would feed arguments that the largest internet companies are too big and need to be reined in."— Paul Gallant, an analyst with Cowen Washington Research Group
Photo: studioEAST/Getty Images
Amazon announced last week that it's putting Apple Music on Alexa. The news follows a new report from the FT that shines new details on Apple's potential deal to acquire terrestrial radio giant iHeartMedia.
Why it matters: Apple is clearly going after Spotify by making its music more accessible and by bolstering marketing efforts. Some analysts argue that in prioritizing mass distribution over exclusivity for its own hardware devices, it's a sign that Apple is taking its push into software sales and media seriously.
Between the lines, from Ben Thompson's daily tech newsletter "The Stratechery."
By the numbers: Apple Music subscribers (likely paid and unpaid) now totals 56 million, bringing it closer to Spotify's 83 million user count, per the FT's iHeartMedia report.
Out of home (OOH) ads — including billboards, subway posters, beach airplane ads and more — are the only type of traditional ad medium that is still growing, according to Magna's latest ads forecast.
Why it matters: Out of home placements are growing as they become more digital and can be bought and sold in an automated fashion, or programmatically. There's also an appeal to out of home ads, because it's hard for viewers to block them out. (You can't set up an ad-blocker to block ads on your subway commute.)