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November 27, 2017

Buying Time: Koch political mega-donors enter the media fray

By MarketLine

The involvement of the legendary Koch brothers in the Meredith Corporation’s $2.8bn purchase of rival publisher Time Inc is causing concern in the US.

Synonymous with right-wing political activism, the Koch brothers are reported to have pumped $650m into the deal.

Despite claims the pair will not have editorial influence or hold a seat on the board, the brothers would not risk capital on such a grand scale without expectations of a suitable return.

The context of the investment grants them influence: The $650m was essential to Meredith in completing the $2.8bn purchase.

Given the financial difficulties the publishing industry has endured, the expected return may very well not be monetary.

Maintaining high level status as leading political donors for the US Republican party is thought to be very important to the brothers; their political organisation spent $889m in 2016 alone on political advertising, data-gathering, and grass-roots activism.

Many political observers cite the brothers as a leading example of the undue influence of billionaire donors on the US political system.

After pulling out of buying Tribune Company — owner of the Los Angeles Times, the Chicago Tribune, the Baltimore Sun and the Orlando Sentinel — in 2013, the Koch brothers did not abandon their media ambitions.

However, it is not unheard of for wealthy business owners to take stakes in media groups while maintaining editorial independence. In 2013¬†Amazon chief executive, and now the world’s richest man, Jeff Bezos bought the Washington Post for $250m and while his influence has been felt through the newspaper’s digital strategy, he is not known to have influenced it editorially.

The Koch brothers could well take a difference approach and certainly have a broader political background than Bezos.

Koch Industries has not been known to be concerned about causing discontent.

Despite maintaining a low public presence the brothers are not shy when it comes to influencing even local elections with big donations, suggesting the $650m invested could be used to influence Time Inc and its flagship magazine towards the libertarian views espoused by the new investors.

If this was perceived to be happening — even if it wasn’t a reality — it would mean a blow to the reputation of the publisher and the wider mainstream media landscape. Recovering would not be easy.

Developing a media empire would be useful for the Koch brothers. Backing up inside political influence with media support makes gaining preferential treatment in Congress easier and resisting the temptation not to meddle could be too strong to resist.