STRUCTURAL BALANCE IN BROADCAST MARKET
As of September 8th, Media General Inc. and Meredith Corp. will merge into one massive company: Meredith Media General. Media General Inc. purchased Meredith Corp. for roughly $2.4 billion, as a means of gaining “leverage in negotiations with pay-TV providers.” These two companies were previously rivals who handled local branches of major broadcast networks such as Fox, CBS, NBC, and ABC. The two companies united under Meredith Media General and will be able to charge television providers much more for the right to display their channels, while maintaining separate control over unique aspects of their company, such as Meredith’s magazines “Better Homes and Gardens” and “Shape.”
This major merger can be seen as an example of the Structural Balance Property. We can consider Media General Inc., Meredith Corp., and one pay-TV provider such as AT&T Inc.’s DirecTV to be in a triangular network. Prior to the merger, the relationship between each node was negative; Meredith Corp. and Media General were two local broadcasting companies looking to oust each other in the business. Both companies were facing debt due to the lack of profit made off of deals with pay-TV providers like DirecTV, resulting in negative edges all around.
According to Structural Balance properties, any triangle of nodes with the relationships minus, minus, minus is inherently unstable and will tend towards a minus, minus, plus relationship. This is because of three mutual enemies, two are likely to form a connection over their common enemy in the third. In the case of Media General Inc. and Meredith Corp., both companies stood the chance of making greater profit by uniting against their common enemy: pay-TV providers. Therefore, the network migrated toward minus, minus, plus relationships.
http://www.bloomberg.com/news/articles/2015-09-08/media-general-to-buy-meredith-in-deal-valued-about-2-4-billion-ieb84762