With Merger, Media General May Add Bargaining Power and Shed Jobs

By Kevin Eck 

LIN Media GWhen Media General announced its merger with LIN Media to create what it calls the “second largest pure-play broadcast business in the US,” the speculation machine started up in an attempt to figure out what the merger meant in the long term.

The new Media General will boast 74 network affiliated owned or operated stations.  The Wrap reports there’s bound to be some market overlap and inefficiencies, which as we all know can only lead to one thing: layoffs.

“They’re merging because they’re seeing some of their competitors in the pay TV arena that are getting a lot larger in terms of scale,” Dennis Wharton, Executive V.P. of Communications for the National Association of Broadcasters told TheWrap. “Broadcasters, I think, believe that they have to have scale to compete against providers who are not giving away their programming for free.”

This is particularly true after the recent announcement that Comcast and Time Warner Cable planned to merge.

However, Wharton played down the possibility of newsroom layoffs. “If there are, potentially there will be job losses in the back offices –  in the areas of finance, human resources and IT,” he said.

But history shows big media mergers also lead to newsroom layoffs.

In 2001, when News Corporation, which owns the Fox Television Stations group acquired Chris-Craft Industries, there were widespread layoffs at Chris-Craft shops in cities where News Corp. already had stations, including WWOR-TV in New York and KCOP-TV in Los Angeles.  In L.A., writers, producers, reporters, anchors, editors and photographers were shown the door.

Since then, the same scenario has played out countless times as more media companies join forces.

In the case of Media General and LIN, the media giants could also be forced to sell off some of their assets in markets where the individual companies already operate more than one TV station, like in Indianapolis, where LIN owns WISH and WNDY.

“There are issues surrounding cross-ownership rules that likely will come into play,” Kraycik said. “Duopolies can help station ownership groups extend their reach and programming in a market. And there are efficiencies you can create with those stations too, leading to better profitability.”

Unfortunately, layoffs also lead to increased profitability for local television station owners.