ABC/Healthline: Reconstruction by the Dollar and the Niche
ABC is a big news brand, with formidable old-world and promising new world assets. Yet, its cost structure is way out of line, as it transitions from the old to the new. So we saw it dramatically slice 25% of its newsroom staff just last month. Today, it announced a deal with Healthline, to supply health content and increase its yield on some ad inventory. We’ll see lots more of these deals, as the big brands — from CBS using GlobalPost, Reuters using Politico, the New York Times using the Chicago News Cooperative and many more — take advantage of what they do best: brand and distribute.
Healthline, and the other verticals (international news, national political focus, intensely local focus, respectively with the others), offer two big plusses for the big brands, brands I’ve called the Digital Dozen because of their out-sized assets and/or financial resources:
- High-quality, yet far lower cost-per-unit (story, blog) of content. Yes, in this case, it’s a numbers game as insurgent content creators like Demand are proving algorithmically. A brand, big or small, can only — at this point — yield so much from a piece of content, the limits of monetization as digital marketing matures. So it must lower the cost of that content creation/acquisition to make the numbers work. That’s what all of these deals are about. The key: get the higher quality content — not just the good-enough stuff that’s ridiculously available — and that fits your brand.
- Niche, niche, niche. Niching gets you clarity, clarity for the company producing the content — health is what Healthline does, not one of 22 beats — and for the readers. Plus, readers get that there is a health-oriented brand behind it; they may not know much about the brand yet, but it stands for an intention to focus. Put together ABC and Healthline brands, for instance, and readers will give it a try.
So with these principles in mind, expect to see unprecedented mixing-and-matching, among the Digital Dozen and the many starter-ups looking for workable business models. It’s not M & A, but a new phenomenon we haven’t yet named.
