If Radio Is A Dying Media, Why Is News Corp Acquiring Wireless Group?

News Corp (NASDAQ:NWSA) is reportedly acquiring a U.K. based company, the Wireless Group Plc (which owns the radio station Talksport) for $ 290 million.  The radio industry is being challenged by digital media and growing at a modest rate of just 2.1%.   Sports radio, on the other hand,  is witnessing huge growth and carving a niche for itself. News Corp’s acquisition will give the company access to Talksport’s broadcasting rights to many games in the popular English Premium League (EPL) soccer competition,  As such it offers diversification to its business. As the company faces a decline in print media subscribers, this additional media format in its network fits well in its long term strategy. There is a perfect match in the audience of its newspaper  The Sun and Talksport (which has more than 3 million listeners each week),  making this acquisition a good strategy. The Wireless group also has a major presence in Ireland, where it owns seven radio stations. As media companies look at various ways to connect with audiences, with print media losing its importance, we believe a sports radio platform can enable News Corp to build its own “network” of different media formats and connect better with its audiences.

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Sports Radio Witnessing Huge Growth

While the radio industry, despite being threatened by digital media, is registering moderate growth, sports radio stations have grown 64% in the last decade. Younger audiences are fueling growth of sports radio stations and 24/7 sports talk is immensely popular with this segment of consumers. Social media are playing a big role in this growth and News Corp’s focused acquisition to capitalize on this trend should help its business.  The Wireless Group’s most popular radio station in the U.K., Talksport’, owns the  broadcasting rights of live Premier League play, the Champions League and FA cup football, making it an attractive deal for News Corp.  The Wireless Group also owns seven radio stations in Ireland, which are witnessing an increase in advertising. According to an Accenture forecast, spending on advertising in Ireland will increase by 10% in 2016 and both television and radio advertising will see an uptick.

News Corp already owns the Fox Sports channel in Australia and we believe a strategic acquisition focused on sports radio should fit well in the long term strategy of the company. As print media witnesses a decline in subscribers, investing in alternate media formats is critical for the company. Diversification is essential for long term growth and it needs to reduce the reliance on print media. The acquisition of the Wireless Group is the right step towards achieving this goal.

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