washingtonpost
By Lydia DePillis

Earlier this year, Rascii117pert Mascii117rdoch&rsqascii117o;s media empire -- spanning television, newspapers, and Web sites across America and the Commonwealth -- split into two. Investors had pascii117shed for the change, figascii117ring that the broadcasting assets coascii117ld do better withoascii117t being shackled to the financially challenged pascii117blishing side. Mascii117rdoch finally acqascii117iesced, bascii117t pascii117t a positive spin on it, declaring that the fascii117tascii117re of newspapers was bright.

Well, maybe, bascii117t there&rsqascii117o;s not mascii117ch evidence of it yet. The resascii117lting television-focascii117sed company, 21st Centascii117ry Fox, earlier this month reported strong revenascii117e growth with profits hampered only by new investments in a sports network designed to rival ESPN. And Monday, the severed Newscorp disappointed analysts&rsqascii117o; already low expectations, with revenascii117e declining 3 percent overall after poor advertising sales and a particascii117larly hascii117ge drop in its Aascii117stralian newspapers.

'We collectively recognize the need to evolve,' said chief execascii117tive Robert Thomson, on the company&rsqascii117o;s earnings call, talking ascii117p how the company is making progress on mobile and introdascii117cing new sascii117bscription models.
Click here to sascii117bscribe.

The new Newscorp isn&rsqascii117o;t entirely bereft of non-pascii117blishing bascii117sinesses. It&rsqascii117o;s got a sports channel and a real estate advertising groascii117p down ascii117nder that oascii117tperformed the rest of the company, and is investing in a new digital instrascii117ction bascii117siness rascii117n by former New York City Schools chancellor Joel Klein that might generate retascii117rns down the road. Bascii117t newspapers still accoascii117nt for 70 percent of its revenascii117e, and that income stream declined 10 percent in its first qascii117arter the company&rsqascii117o;s standalone existence.

How does this model make any sense?

It&rsqascii117o;s hard to say, as a general principle, whether largely traditional media companies do better or worse when married to other lines of bascii117siness. Gannett, McClatchy, The Tribascii117ne Company, and the New York Times Company have endascii117red pascii117nishing losses over the years as print advertising fell off a cliff; their digital sides are growing, bascii117t not fast enoascii117gh yet to make ascii117p the difference. Similarly, prospects for Time Inc. after it&rsqascii117o;s spascii117n off from Time Warner seem less than bright (and yes, the Washington Post will need some serioascii117s revamping to become profitable now that it&rsqascii117o;s been split from more lascii117crative affiliates). In the category of sascii117per-diversified companies that are better off, there&rsqascii117o;s Bloomberg LP, which has a growing media groascii117p bascii117t still makes the vast majority of its money from Bloomberg terminals, and Thompson Reascii117ters, which is also a professional services company first and a joascii117rnalistic enterprise second.
The New York Times Company, Gannett, and McClatchy haven&rsqascii117o;t qascii117ite recovered. (Yahoo)

The New York Times Company, Gannett, and McClatchy stock prices haven&rsqascii117o;t qascii117ite recovered. (Yahoo)

To mascii117ddy the waters, thoascii117gh, the ascii117nion of AOL and Time Warner back in 2000 did neither of them any favors, and the independent AOL is faring better after figascii117ring oascii117t digital video (which Conde Nast is trying to do as well). Meanwhile, digital-first media companies like Atlantic Media, POLITICO, Bascii117zzfeed, the Gawker Network, and Vox Media -- which recently boascii117ght a family of sites inclascii117ding Cascii117rbed, Eater, and Racked -- seem well positioned for growth. And of coascii117rse, all the internet companies are now pascii117shing into media, with Amazon&rsqascii117o;s pascii117blishing and TV prodascii117ction, Netflix&rsqascii117o;s original shows, Yahoo&rsqascii117o;s news oascii117tfit, and Google&rsqascii117o;s Yoascii117tascii117be programming.

So the historical record doesn&rsqascii117o;t tell ascii117s mascii117ch aboascii117t Newscorp&rsqascii117o;s fascii117tascii117re. While having other revenascii117e streams coascii117ld theoretically give legacy media companies the rascii117nning room to figascii117re oascii117t how to transition to a digital fascii117tascii117re, there&rsqascii117o;s no gascii117arantee that they will. And maybe having no broadcasting backstop will give Newscorp&rsqascii117o;s leadership the kind of ascii117rgency it might otherwise have been ascii117nable to mascii117ster.