Media is an ‘acquired’ taste – but who wants to acquire it?
By: Eeshita Verma
Mohammad Abdul Muqeet
This article from our research challenge appeared in Qrius.
On the 14th of April 2022, Elon Musk, the world’s richest person, took to Twitter to announce that he would be acquiring the very same platform. The incident stirred up a huge conversation about his intent, with people strongly divided into various schools of thought. Some believed the acquisition was purely driven by his intent to grow his business / net worth, some believed he genuinely wanted to transform Twitter, while others believed that the decision was the product of an impulse.
Even though Elon Musk stated that his sole objective was to encourage free speech, it’s hard to discount the possibility of a more manipulative motive. Anyone who can drive a 14% surge in the world’s largest cryptocurrency, just by adding the word “#bitcoin” to his bio, and subsequently bring about a 7% fall by tweeting “Bitcoin (heartbreak emoji)” would have little to gain from ‘making Twitter unbiased and free.’ 
Image 1 – Elon Musk expressing his concern over Twitter’s failure to uphold the ideal of ‘free speech’
Not all publicity is good publicity
The sway and power that media houses hold over people is no secret. Investors are more likely to invest based on external factors (information they digest through media sources) over traditional methodologies. Tetlock’s 2005 study found that people will be quick to react, in terms of both market pricing and trading volume, even when the media presents a mere point of view, and no new technical information.Moreover, according to a 2019 study, the effect of negative news on a company’s reputation is three times larger than the effect of positive news.
This increasing reliance of investors on media for their investment decisions and the alarming influence of media on company stock provides a strong impetus for billionaires to step in and take control of media houses.
So maybe it’s no coincidence that there have been about 9 media acquisitions by billionaires in the last 10 years alone. Not to mention the deals underway. And interestingly, most of these acquisitions have been completely unrelated to the billionaires’ core lines of business.
Table 1 – Popular acquisitions in the past decade [4, 5, 6]
At first, the trend reflects a disturbing acceleration of the ability and desire of the rich to influence our perception of them. But with a deeper analysis, the issue seems more and more ‘gray’ than ‘black and white.’
Even though Elon Musk eventually pulled the plug on the Twitter acquisition contract, it raised an interesting question – is there a common objective behind billionaire acquisitions of media companies?
How ‘objective’ are the objectives?
This research aims primarily to discover and understand the objectives behind media acquisitions by billionaires.
First, there is a stark difference between how the billionaires themselves describe their intentions, and how they are reflected by the media.
Table 2 – Objectives stated by the Billionaires vs those stated by the media
For the purpose of this article, the analysis has been restricted to 5 billionaires (Jeff Bezos, Mukesh Ambani, Laurene Powell Jobs, Marc Benioff and Patrick Soon Shiong), the caveat being availability of information. The definition of media house has been extended to include any means of communication (including the internet) that can reach or influence people widely. While examining the CAGR of the ranks of ~130 billionaires who neither made any media acquisition nor owned any media house, selected at random, it was observed that there were nearly as many people whose ranks deteriorated as there were whose ranks improved, indicating that the decision to acquire or own a media house does not impact the net worth of billionaires.
Fig. 1 – CAGR of the ranks of those billionaires who neither own nor acquired a media house
When analyzing the CAGR of the ranks of those 5 billionaires who made media acquisitions in the past decade, for pre- and post-acquisition periods, it was found that while 80% of billionaires improved their CAGR, only one of them (Mukesh Ambani) improved it considerably.
Fig. 2 – CAGR of the ranks of those billionaires who acquired a media house, pre- and post-acquisition [Increasing CAGR implies a deterioration in rank whereas decreasing CAGR implies improvement in rank]
To understand the situation better, the CAGRs of the net worth of these 5 billionaires were compared with the CAGRs of the S&P 500/NIFTY 50, whichever applicable, for two periods: pre- and post- acquisition. The aim was to understand how the billionaires performed against the market in these two periods. Again, while 60% of the billionaires improved their growth against the market, only one billionaire’s situation considerably improved after the acquisition: Mukesh Ambani, after acquiring Network 18 in 2014.
Table 3 – CAGR of the ranks of the billionaires who made media acquisitions compared with the CAGR of the relevant stock market index, pre- and post-acquisition
On the face of it, the data looks inconclusive, but a closer look illuminates two possible conclusions:
What could have possibly gone wrong in the acquisition? The choice of media? The timing? The geography?
The first possibility is ‘distraction’ – the billionaires getting so consumed in transforming their new venture, that they lose focus on their core businesses. Mr. Ambani was certain about his intentions from the start, to both himself and the media. He wanted to leverage Network18’s web portals and e-commerce operations as a possible provider of value-added services to Reliance Industries’ broadband subscribers. He had a clear goal in mind, and worked in that direction, undeterred. However, this key ingredient was lacking in most of the other cases visited.[17, 18]
The second factor that could have gone wrong is the form of media – whether the target company for the purpose of acquisition produces print or broadcast media. In Ambani’s case, television has the deepest penetration throughout India, reaching approximately 475 million people every day compared to traditional media like print reaching 282 million individuals, and radio reaching 110 million.  Put simply, Mr. Ambani made a broadcast media acquisition in a country which demonstrated ample demand for it. By contrast, all other acquisitions by billionaires focused on print media – digital or otherwise.
Lastly, the third possibility, albeit remote, is that one needs to consider a longer time frame to accurately evaluate the results of the acquisition. In other words, it’s too soon to judge if the impact has yet been realized.
Heart over Head:
While it is easy to speculate that billionaires become involved with the media as a power play, Joshua Benton, director of the Nieman Journalism Lab at Harvard, suspects their motivations are less calculated. “I think a bigger factor is that media is comparatively cheap and a pretty fun business,” Benton tells CNBC Make It. “Being someone who owns a significant cultural institution feels good.” 
Benton’s speculation is not unfounded. Jeff Bezos, when asked to comment about his Washington Post acquisition, remarked, “My decision-making process for something like this was definitely intuition and not analysis”. In fact, the acquisition wasn’t even his idea. Donald Graham, son of the Washington Post’s legendary publisher Katharine Graham, was the first to approach Bezos with the proposal. Bezos, on the other hand, countered the idea.  His disinterest in the newspaper industry becomes all the more clear with this statement he made to the German paper Berliner-Zeitung, a year before the acquisition: “There won’t be printed newspapers in 20 years. Maybe as luxury items in some hotels that want to offer them as an extravagant service. Printed papers won’t be normal in 20 years.” 
When analyzing emotions as the driving factor behind acquisitions, it is also worthwhile to mention acquisitions where the billionaires simply ‘loved the brand’ for a long time before they considered an investment. Elon Musk is an obvious example of this line of thinking.
These exhibits make one wonder whether these media acquisitions are elaborate schemes of minting more money, or simply impulses followed too quickly.
The bottom line
It’s easy to ascribe selfish intentions to billionaires making highly publicized attempts to purchase media outlets, but the reality is a bit more complicated. Acquisition needs and strategies are unique to every billionaire, so there is not a clear pattern to media house acquisitions. In 2017, 109 billionaires owned the top 140 sports brands, perhaps for no other reason than they could. Perhaps owning media houses is simply the latest fad among billionaires.
Maybe a better way to understand an acquisition is to ask, ‘what has the billionaire done with it’ instead of ‘why have they done it’. The face-lift of the Washington Post is purely attributable to Bezos’ efforts, who tripled its web traffic and enabled its return to profitability within three years.  A variety of motivations and objectives can justify a decision to acquire a media property – whether a clear leverage in existing capabilities, love for the platform, or belief in transparency. What matters more, however, is how it all turns out – a ‘selfish maneuver’ or a ‘thriving, bolder voice of the people’.
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