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- The Disney-21st Century Fox deal has been announced, and some media analysts expect a flurry of deals to follow.
- The first may be for independent Hollywood studios, as content clout suddenly becomes in high demand.
- Some experts see Viacom as a natural acquisition target.
- What will really be interesting is whether tech giants like Amazon, Google and Netflix feel motivated to get acquisitive.
Now that Disney has announced a $52.4 billion deal for slew of assets from 21st Century Fox, it’s hard to imagine that other media titans will stand pat.
In fact, many in the business expect a frenzy of acquisitions, as the industry grapples with the looming spectre of Silicon Valley, with its powerful platforms and deep pockets, not to mention rapidly changing consumer media habits.
“It’s an all out war on the content front,” said Peter Csathy, founder of the media consulting firm Creatv Media. “Conference rooms are buzzing, and everybody is talking to everybody.”
Who knows what’s next? Here are a handful of possible moves, at a time when almost anything seems possible.
Everyone needs to get bigger, starting with the studios
If Disney is indeed buying Fox assets to hoard content for its upcoming streaming service (and to make movies featuring the X-Men and other Marvel characters), do other media giants need to load up on content?
As Business Insider’s Nathan McAlone recently noted, the concentration of power is only growing. So staying small is getting tougher.
“Scale matters when you negotiate,” said Michael Goodman, director of Digital Media Strategies/Digital Consumer Practice at Strategy Analytics. “This is sort of a continuation of a reaction to AT&T-Time Warner.”
Here are some potential studio targets:
- Lionsgate (The “Saw” franchise, shows like “Orange is the New Black” and “Mad Men.”)
- MGM (James Bond)
- Sony (“Spider-Man” and “Better Call Saul,” though observers say any deal would be complicated)
Potential studio buyers:
Comcast: As digital ad veteran Jay Sampson, who’s logged long stints at Microsoft and Adobe, sees it, AT&T may soon have Time Warner in house. Thus, Comcast may need to match that combo by adding a studio with a deep back end catalog. “They’d get efficiencies in production cost, marketing and distribution and maybe vault ahead of Time Warner,” he said.
Amazon: The company is looking for the next “Game of Thrones,” reported Variety. “I can imagine an Amazon getting into the game,” said Csathy. “Their underlying strategy is to drive Prime membership.” And the more reasons people have to subscribe to Prime (like say 20 plus Bond movies on demand), the more shoppers locked into the Amazon ecosystem.
Netflix: They’ve already bought a comic book producer, which provided the streaming juggernaut with its own IP. If Disney plans to choke off its library, maybe Netflix buys an MGM to fill out their library while continuing to invest in originals.
Viacom has its challenges, but is it suddenly a big target?
There’s no doubt the media conglomerate has its obstacles. Viacom’s core business is cable networks aimed at young people (Nickelodeon, MTV) when young people are running from cable. Still, it’s got tentpole events like the “Video Music Awards” and kids franchises like “Paw Patrol.”
Plus, Viacom owns the movie studio Paramount.
Would be buyers:
- Viacom could recombine with CBS (they were part of the same company through 2006)
- Viacom could look to connect with other cable stalwarts Discovery/Scripps
- Or the likes of Comcast, Netflix, Amazon or even Google could be interested. Maybe Google sees Viacom as a way to jump start its move into TV ads?
Doubtful, said Pivotal research analyst Brian Wieser. “I think the answer to pursuing TV advertisers’ budgets is ongoing investment in video content,” he said “I don’t think Google necessarily buys anyone to do that.”
Is Verizon a buyer?
The wireless company was reportedly also kicking the tires on Fox. While Verizon has moved aggressively in online ads by purchasing AOL and Yahoo over the past few years, they are way behind when it comes to the TV screen.
However, Verizon may be waiting to see what happens with AT&T/Time Warner. In fact, lots of people may be waiting for a decision on that deal.
The Justice Department waiting game
Is the AT&T/Time Warner deal actually going to happen? It’s uncertain, as the Justice Department has sued to block the deal, while the parties remain confident. Looks like a decision won’t happen until well in 2018.
The way this court case plays out could impact the appetite and parameters of lots of potential deals.
In the meantime, Goodman sees more consolidation among independent, regional cable distributors, such as Altice USA’s recent purchases of Cablevision and Suddenlink Communications. “It’s getting harder and harder for small operators,” he said.
REUTERS / Jonathan Ernst
What if net neutrality goes away too? Then things might get crazy
Sampson predicted that controlling the pipes into people homes, i.e. the broadband service that delivers people the internet, will suddenly become paramount, since theoretically broadband companies could favor certain web content over others. That’s when things get interesting.
For example, what if Amazon (or Google or even Facebook) bought Comcast?
“They’ve made big inroads into the home [with devices like the Amazon Echo],” Sampson said. “Amazon to sell you stuff and Google and Facebook to sell you ads. Long term, they don’t want to be relying upon a cable operator or wireless carrier to get them there.”
Plus, Sampson theorized, whoever controls broadband access will be able to start charging companies like Netflix a toll to get their content to peoples homes – or choke them off. Lots of Netflix rivals would seem to be interested in that.
But many observers had serious doubts about how much Net Neutrality rule changes would impact the way media companies operate.
“I think Amazon makes decisions based on what drives prices down or otherwise adds value to its retail and e-commerce consumers,” said Wieser. ” I don’t know that owning pipes or distribution to consumers is necessarily that important.”
Another reason Amazon may not want to go that route. “What if Trump is gone in a few years, and you’ve shifted your whole business and the laws go back?” Goodman asked.
Does Apple do anything?
Csathy predicts Apple will launch its own Netflix competitor, as it will need a place to launch its own shows (Apple wants to spend $1 billion on content). That’s why buying a studio could make a lot of sense, he said.
Others have resurfaced a popular theory: Apple could buy Netflix, and put its shows there.
Apple isn’t know for making mega acquisitions, Csathy noted. But they could look to grab a dark horse content contender.
“Apple wont be able to stand on sideline,” he said.
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