Breaking news this morning that the News Corporation side of Rupert Murdoch's media empire has bid to acquire the 61 per cent of BSkyB that it does not own is a sign of a sector consolidating to offer a new package and business model to reflect what technology has done to its market.
News Corporation is essentially the newspaper division of Murdoch's UK operations and publishes The Times, Sun and News of the World titles in print and online. Recently the Wapping based corporation announced that it was putting a pay wall onto the Times site to generate subscription revenue. This move is an about turn by Murdoch who said when he bought the Wall Street Journal, which has always had a pay wall, that he would make it free, something he never did.
BSkyB is the Murdoch satellite television broadcaster that is now over 20 years old and dominates sports broadcasting in Britain through its rights deals for Premiership football. From day one BSkyB has been a subscription model, and no matter what your opinions are on the quality of its news and content outside of sport, everyone must agree it has been a successful business from the outset.
With the print newspaper industry on a serious downward spiral and their news content difficult or impossible to charge for online, a consolidation of broadcast media with written media was likely to be experimented with by someone. Rupert Murdoch, the Australian loved by the Conservative Party, was always likely to be one of the first movers because he has breadth of media in his ownership of TV and newspaper titles, but also because he is a brave and audacious media owner.
If the consolidation passes regulatory approval it will lead to new business and subscription models. It is very unlikely that the regulators will get in the way. Murdoch's media, in both print and broadcasting, fully supported the Conservative's in their election coverage and culture Minister Jeremy Hunt has already said in interviews he wants to reconsider the ownership rules placed on the media in the UK. Past history also shows that Murdoch tends to do well from Conservative governments.
But the real issue is that a News Corporation organisation that includes BSkyB and The Times will be able to offer "all you can eat" easily digestible subscription deals for TV and news content, as well as the offers in telecoms and broadband connection already available. With its television business doing well, but its newspaper business struggling, News Corp will be able to revise its business model and revenue streams to ensure the Times and Sun brands continue for years to come.
Technology is the reason this new business model is required. The internet has devastated newspapers and made general news a freely available commodity, but that has made the costs of printing, distributing and writing newspapers difficult to justify. Devices such as the Apple iPad may change the way the public consumer media, both written and broadcast and the TV set top box has already revolutionised the living room at home, and why shouldn't it also be the means to written news as well as Premiership football? I would be very surprised if by the end of the year a Sky + subscription doesn't include the Times newspaper or Times Online access too via the TV, wireless device and maybe even good old fashioned paper.
If the deal and approval is successful it could lead to a spate of consolidations in the marketplace as struggling newspaper companies look to partner with broadcasters. Perhaps we will see ITV and the Daily Mail & General Trust merge; or Channel 4 and The Guardian aligning their liberal coverage and Channel 5 and the Express could surely work together?
Aligning all the media and how consumers pay for it is a business model that has to be explored to sustain the sector and to reduce costs. A News Corp that can sell advertising across television, internet and print from a smaller, but more dynamic sales team will reduce costs dramatically and is no doubt high in the minds of senior management at both organisations.
One beneficiary from all of this is likely to be the forthcoming CIO of News Corp Paul Cheesbrough who leaves rival newspaper The Telegraph in September to join Murdoch's newspaper empire. He will have an exciting time integrating these two if it all goes ahead.