Vertical Integration and Horizontal Mergers and Acquisitions

Abstract

From a business point of view the strategy of most newspaper firms has been stable for many years. Despite the rapidly changing media landscape that surrounds the newspaper organisation, the strategic parameters in the newspaper industry have not changed significantly. The production process is basically the same as a century ago, the business model has not changed in its essence, and although technology may have had a substantial impact on the efficiency of the production process and operations, the final product is still ink on paper. Newspaper firms have simply continued doing what they are good at: producing their printed newspaper every day, focusing on optimising the manufacturing process, while monitoring circulation and advertising levels. Radical change and drastic measures are often qualified as harmful, and the credo is: evolution instead of revolution. Even in periods of severe problems, such as for example a structural decline of circulation and readership, or a dramatic decrease of retail advertising, newspaper management has generally preferred to avoid making major changes. Although strategy of newspaper firms seems very stable, in the sense that the strategic paths newspapers have followed for years remained the same, times seem to be changing. Fundamental changes in their business environment, increasing threats from potential competitors from outside the industry, and core market segments challenged by new businesses (e.g. electronic market places), force newspapers to reconsider the fundamentals of the way they compete. In chapters 4, 5 and 6 the corporate strategy of newspaper firms in the Netherlands and the U.S.A. will be described and analysed.

’Most managers’ top concerns are with the newspaper’s core areas circulation and readership, then advertising and editorial. Given that level of fear, you might expect major innovation devoted to solving those problems. Yet individual newspapers react primarily through fine-tuning, meeting big challenges with the comparatively small efforts.’ (Wilson & Igawa, 1994:26).

’Newspapers are confronted with strategic and cultural issues. Newspapers are not strategic. They lack a business definition and a mission, and don’t know how to make these harsh decisions’ (INT30.181095).