Media Merger: Who’s Next?

In the illustration in this photo, the HBO Max and Discovery Communications logos are displayed on your smartphone.

Rafael Enrique | Light Rocket | Getty Images

NBC Universal and Lions Gate

buy Lionsgate We support Comcast’s NBCUniversal in two different ways. First, add content to NBCUniversal’s subscription video service, Peacock. Lionsgate owns programs such as “Mad Men,” “Orange is the New Black,” “Nashville,” and “Zoey’s Extraordinary Playlist.” Lionsgate is currently licensing these shows to its streaming service Grabbag.

Second, Lionsgate owns the premium network Starz, which seamlessly integrates with NBCUniversal’s services. NBCUniversal, unlike its competitors WarnerMedia (HBO) and ViacomCBS (Showtime), does not have a premium network.

On the streaming side, the Starz-Peacock combination has the potential to extend NBCUniversal’s global goals by offering them together as a single service or as individually bundled services. Starz plans to have 60 million subscribers worldwide by 2025, CEO John Feltheimer Said this week. Starz is already available in 58 countries, which gives Peacock a good start in its expansion.

And Lionsgate has a market capitalization of only $ 3.8 billion (corporate value of about $ 6.4 billion), which isn’t too expensive. If Comcast intends to keep NBCUniversal–against AT & T’s decision to give up vertical integration–acquiring Lionsgate is wise to stay competitive in streaming wars without breaking banks It’s an action.

WarnerMedia-Discovery and ViacomCBS

There is already speculation about the potential for a future merger between the newly created WarnerMedia-Discovery entity (if the transaction is completed) and NBCUniversal.Discovery’s controlling shareholder, John Malone, is CNBC on how the merged company will be May merge in the future With NBC Universal, if regulatory permits.

However, the divestments that you may have to perform can be complex and inefficient to make that combination. Regulators may not allow CNN and MSNBC to be placed under the roof of a single company. Integrate Comcast’s Universal and WarnerMedia’s Warner Bros– The 2nd and 3rd largest movie studios in 2019 box office And 2018, Last year of theatrical release–Also, it may not be a starter.

A more logical combination is with WarnerMedia-Discovery Viacom CBS..

Shari Redstone’s company has a broadcast network –CBS. This is suitable because WarnerMedia-Discovery does not. (The combination of CBS and NBC under one roof is one of the major obstacles to the ViacomCBS-NBCUniversal merger.)

Unlike NBCUniversal, ViacomCBS does not have a large cable news network. This will keep your CNN more viable.

ViacomCBS also owns a movie studio, but Paramount has generated far less box office revenue in recent years than Universal. Among the world’s movie studios, Paramount was sixth in box office revenue in both 2018 and 2019.

The biggest complexity is whether Redstone gives up or dilutes its stake in ViacomCBS. That’s what Malone did to push Discovery and WarnerMedia together, and now we have a template.

Disney and AMC Networks

This is the hardest to sell.Disney is not particularly necessary AMC Networks. that is I’m doing perfectly well With its contents.

However, much of Disney’s Hulu content is licensed, so you could lose some of your hit shows. For example, MGM creates “The Handmaid’s Tale”. With Amazon’s acquisition of MGM, it’s unclear if the series will remain on Hulu after the deal is closed.

Owners of The Walking Dead, IFC Films, and Sundance Now can provide Hulu with an adult-themed content boost. It balances a full range of services for children on Disney + with sports on ESPN +. AMC has a prediction Have at least 9 million streaming subscribers by the end of 2021 By the end of 2025, there will be 25 million people. Hulu’s current 41.6 million or Disney + 103.6 millionBut that’s proof that programming has at least some viewers.

And the cable is slowly dying, but not yet. About 85 million households in the United States I’m still subscribed to some form of bundled linear TV.

Disney’s ESPN continues to be the lifeblood of traditional pay-TV bundles. Bundle your AMC Networks cable network with ESPN to protect your affiliate fees. Pay TV providers are always reluctant to remove ESPN.

The Dolan family manages AMC Networks. Dolans may have known for years that AMC Networks is small and needs to be combined with larger media fish. If Dolans don’t want to sell, they don’t. However, AMC Networks is relatively small, with a market valuation of $ 2.2 billion and a corporate value of approximately $ 4 billion. Disney could easily buy the company in cash.

But Disney’s earlier acquisitions-Pixar, Marvel, and Lucasfilm-were aimed at intellectual property. Does AMC Networks own an IP that is well worth it to make a valuable deal for shareholders, and is that IP family-friendly enough to engage with its theme park business?

That may be the reason why the Disney-AMC deal hasn’t come true yet.

Disclosure: NBCUniversal is CNBC’s parent company.

Watch: Amazon’s acquisition of MGM adds value to Prime users: Mark Mahaney

Media Merger: Who’s Next?

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