Wednesday, September 5, 2007

Elvis sitings, alien abduction, and product repositioning

One of the most interesting mergers I worked on at the Department of Justice was between the Star and Enquirer newspaper groups, which produced the two biggest supermarket tabloids. Usually, media are viewed as vehicles for delivering advertising to an audience and the antitrust concern is a loss of competition for advertising dollars.

For supermarket tabloids, however, most of the revenue comes from circulation, not from advertising. In this case, we asked whether the merger would reduce the intense competition between the tabloids for exotic stories of alien abduction and photos taken by the paparazzi. Circulation for these impulse purchases (very few readers subscribe) is largely driven by the cover stories and photos.

Ultimately, this merger didn't pass the laugh test--could you ask a judge to block the acquisition without cracking a smile. In addition, product repositioning and entry appeared to be easy. In one week's time, the National Enquirer changed from a black-and-white tabloid printed on cheap newsprint reporting the latest Elvis sitings to a color, glossy mat with celebrity photos and weight-loss advice.

And as the National Enquirer went upscale, the The Weekly World News stepped into its place. This kind of product repositioning should mitigate the adverse impact of mergers (academic paper).

Time Magazine reports that the Weekly World News has printed its last edition (thanks to Gongol.com). Where were you when you heard the news?

No comments:

Post a Comment