By merging its cable TV assets with Cox Enterprises, Times Mirror Co. is signaling that the old rules that shaped the diversified media conglomerates of the past 30 years may no longer apply in an era of rapid technological change in communications.
After decades of following a cautious path and staying close to its publishing roots, Times Mirror is dramatically repositioning itself as a "content provider" for the coming age in which information and entertainment will be received over everything from computers to interactive TV's.
"The fundamental decision is that we want to focus on the content side," said Robert F. Erburu, 63, chairman, president and chief executive of Times Mirror. "That's the strength we're best able to build upon in the future."
As Times Mirror executives envision it, becoming a content provider means everything from launching and investing in cable TV networks such as The Outdoor Channel to using the information gathered by its newspapers and magazines for new programming services and ideas.
The emphasis on content also means that Times Mirror does not have to worry about which "platform"--cable TV, telephone lines, wireless personal communications services or satellites--delivers the information into the home and can become a provider to all of them.
Times Mirror's decision to spin off its 1.2-million subscriber cable TV assets to Cox comes at a time when all major media companies are looking at what role they will play in the coming so-called information superhighway, where it's expected that consumers will be able to order movies-on-demand, play video games and shop electronically over their cable TV.
Media companies such as Times Mirror also face a thundering herd of competition, from local phone companies to giant entertainment conglomerates and computer firms, which all want to cash in on ways to deliver information to the consumer at home and work.
The plan, perhaps most significantly, indicates that Times Mirror is bearish about the company's long-term prospects as a cable TV operator, and would rather provide information that cable firms, telephone companies and other electronic distributors can sell to the public.
"It pretty clearly tells you that Times Mirror feels the future of the business is providing content into the business-oriented distribution market," said James D. Dougherty of Dean Witter Discover & Co. The company believes, he added, that "it's better for Times Mirror to be out of the (cable) business when they can get a good price for it, and when they feel the returns on cable are just going to shrink over a long period of time."
Erburu, however, said that making the capital investments to build the broad-band infrastructure would use up Times Mirror resources at a time when it wanted to invest the money elsewhere.
Once a diversified media conglomerate, Times Mirror in recent years has refocused on its core business of big-city newspapers and professional-textbook publishing, as well as making some forays into new media technologies.
Such a strategy is unusual in the clubby world of media empires, where the conventional wisdom has been that stakes in as many areas as possible--newspapers, broadcasting, cable TV, magazine and book publishing--is the best way to hedge bets and ensure growth.
The shift in Times Mirror's strategy also has been accompanied by a move away from a family-run business to a multibillion-dollar corporation run by professional managers.
Although the founding Chandler family still controls more than 50% of Times Mirror's voting stock and has four seats on its 14-member board, the family has not been involved in the top management for a number of years. Otis Chandler retired as publisher of The Times in 1980.
Beginning in the 1960s, after it went public, Times Mirror aggressively expanded, buying TV stations, cable TV systems, major newspapers, magazines, and professional book publishing companies. The strategy paralleled that of other media firms.
Indeed, over a 30-year period Times Mirror spent $2.2 billion in cash and stock on acquisitions and another $3.4 billion in capital expenditures.
The acquisitions propelled Times Mirror into the leading ranks among media companies and earned it a spot as No. 135 on the Fortune 500 as recently as 1991. But Times Mirror's diversification strategy included mixed results along the way.
The company eventually unloaded unprofitable newspapers in Dallas and Denver, taking a $65-million charge against earnings in 1991.
A trade magazine bought in 1987 for $75 million was sold four years later for $32 million. And last year Times Mirror sold its four network affiliate TV stations for $320 million, only to have the buyer sell them six months later for a considerably higher price.