Understanding the Next Era of Media (with Sara Fischer)

Yeah, of course.

Yeah, so no day looks the same. I am also a contributor to CNN, and so the news cycle means that one day you might be in studio at 5:00 in the morning getting your makeup done. Another day you're there till, you know, 11:30 at night. And some days I'm, you know, doing work for CNN in New York or in another city. Other days I'm in DC, which is where I am based.

And at Axios we do a ton of events, so I'm constantly on the road as well amid all of that. And so it's just every single day is a new day of managing logistics and travel. And in order to be prepared for all of the media appearances that you'll make within that time, you know, I probably do at least like one or two stages. It's just you have to constantly be reading and staying up to date on all things in the news, and really not just the media and advertising beats that I cover, but you also have to really understand what's happening geopolitically, with technology, in local communities, because all of those things impact our coverage of media and advertising.

It'd be very distributed. There used to be only a select number of platforms where people could get news and information, and now they can get news and information in what feels like an infinite number of places, and there's a lot of challenges that come with that, and there's also a lot of opportunities that come with that. And I think the traditional media industry, which is, you know, publishing companies, on the entertainment side, sort of film and television firms, radio, local broadcast, they are trying to navigate what their role is in a distributed landscape where they have to share ad revenue with a lot more companies, and they have to share user attention with a lot more companies, and user subscription budgets. But overall, I think that that, you know, forces the industry to be more competitive than it's ever been in terms of the quality of the product and the offering. So, it could be, you know, a really great opportunity to make our industry better than ever before.

Well, in terms of user adoption of technologies, the user adoption of generative AI technologies has far outpaced any technology in the internet era, including the adoption of smartphones, the adoption of desktops. So, it's definitely generative AI, but, you know, we're still in the early innings of that, and so it's hard for me to quantify like how big that impact's going to be. We just know, based off of early adoption data, that it's fundamentally changing the way people are engaging with the world and the economy. You know, if we had the agricultural revolution and then the industrial revolution, you know, and then the internet revolution, this seems like the fourth major revolution, you know, sort of like the quantum computing revolution, and it's going to be significant when we look back historically.

I think volatility in the ad market as it relates to what's happening in Iran with the Strait of Hormuz being closed is in the near term a very serious concern because that's impacting the flow of goods and supply chains in a way that will impact how much marketers can spend to market their goods, and a lot of those dollars tend to flow down to media and entertainment companies. So, that's one. I think in the long term, there's concerns around on the news side, press freedom, and what that means for the state of American democracy. In the long term on the business side, there's concerns around consolidation and how we are regulating consolidation.

You know, we've seen historically when you over-regulate, especially in media, there can be some unintended negative consequences. The best example being, you know, we used to have and we still kind of do plurality laws that don't allow you to own too much share of voice in a particular market of a local broadcast, local newspapers, and if you did, if you did try to merge, you know, you could be sued for antitrust. And we've seen in the past when that happens, Charleston, West Virginia is a very classic case study of this, you might inadvertently actually knock those outlets out of business. And so, we're in this state right now where I think everybody recognizes that the pace of globalization and technology and disruption is forcing consolidation amongst legacy industries, but nobody's quite on the same page around to what extent we should be deregulating them to compete, enforcing historical regulations, creating new ones. Like all of that is very much up in the air, and that's a pretty big concern because when you don't have a solid sort of legal system to go off of, it creates uncertainty in the market. We're also seeing that same level of uncertainty around copyrights and AI sort of legal fair use. There's so much ambiguity right now around what AI companies can scrape that belongs to media companies and creators and news companies. And until some of that gets resolved, I think the entire industry is going to be a little paralyzed and it's not going to be able to innovate as quickly.

It's never meant better. I mean, if you take a look at the doomed acquisition or the doomed merger between AOL and Time Warner, you know, bigger is not necessarily better, and historically it does not always play out to be. If you look at Disney acquiring the entertainment assets from Fox, and now, you know, with the exception of some of the studio assets, they're trying to look at ways that they can not lose so much money on like all the cable channels that they bought, right? So, bigger is not always better, and I think people are recognizing that it can become a liability if you do it wrong. I think that's why Netflix bailed out of the Warner Paramount deal. You know, it got to a place where it was no longer prudent to spend so much money on something that you can't assure shareholders is going to be accretive long-term. I do think one of the reasons though you're seeing a lot of consolidation, especially on the traditional media side, is because either these players combine to compete or they get taken over by like private equity to be able to compete. And I think that there's a question of like what's the most strategic path forward, but everyone I think recognizes that you're not going to be able to stand alone to compete. A good example of that was probably Paramount before it was acquired by Skydance. You know, Shari Redstone was fielding so many different offers. There's a lot of different private equity firms and you know, foreign money and all this stuff that was interested. And I think for her, combining this with Skydance Media, which is a movie studio, felt like it would preserve the culture and the mission of her traditional media company better than if, you know, she sold the thing to private equity. So, I think that's another factor to think about when it comes to consolidation right now.

Well, I mean, the classic example has in some ways been Gannett because it was a publicly traded US newspaper company. They were basically going to get eaten alive by private equity, and so they got taken over by GateHouse, which is also private equity, but you know, that kind of helped them stave off a takeover from this other hedge fund that's considered sort of like a boogeyman for news. So, you know, one might argue that the Gannett-GateHouse merger saved Gannett in some ways, others would say it forced a lot of layoffs and synergies. Other examples where it has made sense, recently, this company called People Inc. It used to be called Dotdash Meredith. Used to be called just Dotdash. It was owned by IAC. They acquired Meredith, I think a $2.7 billion deal in 2021, and that has definitely proven to pay off. They've been able to help those Meredith magazine brands like Better Homes and Gardens and Southern Living monetize, and it's absolutely become a digital behemoth for IAC. So much so that IAC rebranded to People Inc. So, that's been a pretty successful deal. See, who else has had some good deals? You know, on the local broadcast side, I think they would argue that they need to consolidate in order to survive. And so, we've seen a lot more energy around that, although the jury's still out in terms of whether or not some of these deals are going to be able to go through. On the studio side, we have a lot of consolidation. You know, Amazon Prime Video acquiring MGM, Disney, as I mentioned, their studios were combined with Fox's 20th Century Fox Studios when they bought Fox. And we've seen that that hasn't fundamentally really reduced competition. Like there's still six members of the, or maybe it's seven now, of the Motion Picture Association. There's still enough buyers in Hollywood. There's a lot of people who are concerned that if the Warner Brothers and Paramount deal goes through, that that deal will be problematic for consumers and for competition, and it will decrease the number of buyers. And I don't know, we'll see how that plays out, but for now, I think that one is likely to go through. One other that I think was kind of a failed one honestly was Warner Brothers Discovery coming together. I mean, there was so much debt that was brought on on that, and that's why they essentially said that they're going to have to split the companies up if they didn't sell the company. That was kind of an example of a failed merger in a way.