Media owners need to find themselves a new waterhole

Any thriving sector attracts new entrants. So, in search and social networking right now, all over the world start-ups are being founded to try and snatch a gulp from this new and apparently prolific fountain.

When the process goes into reverse and the sum of revenues to a sector is in decline, the opposite happens.

Profits fall and the number of market players declines. Some go bust, some withdraw and others merge to share their unavoidable costs, increase their market share and eke out an existence from the thinner trickle of a waning stream.

Such consolidation is a standard response to lean times.

We've seen it in the regional newspaper sector, where owners are now lobbying the Office of Fair Trading to allow them to go much further, to the creation of two or three supergroups who would swap assets to reduce competition, save costs and shore up profits, area by area.

It hasn't come to the British national press yet, although the imminent move of The Independent into the Daily Mail HQ surely heralds the start of a long process that will see national newspapers close, merge or slim down dramatically into online-only creatures.

In television, the general hubbub about throwing together some combination of ITV, Channel 4 and Five presages similar concerns about these firms as stand-alone operations. But, last month, Michael Grade ruled out any such deal. He is right to do so.

Grabbing onto the nearest available object is a natural reaction when you feel yourself sinking, but when the other guy is in the same quicksand, this is no long-term survival strategy.

By combining their thrashings, the two may stay afloat a little longer in the hope the ground will stabilise.

But making family out of rivals is not easy - there is no shortage of evidence that rather than preserving value, some mergers succeed only in destroying it.

This remedy will, of course, be peddled by investment bankers, whose deal flow is pretty slow right now, but it is not a panacea.

Better by far for TV companies to share costs like the Indy and Mail, agree cross-promotion deals, share stuff.

But their fundamental problem is the same as the regional press.

The waterhole that has sustained them throughout their lives has attracted too many other animals.

They need a new place to drink.

Richard Eyre was formerly chief executive of the ITV Network and a director of Five, richard.eyre@haymarket.com

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