Media merger could open floodgates
NEW YORK — Comcast submitted an all-cash bid of $65 billion for Fox’s entertainment business Wednesday, one day after a federal judge cleared AT&T’s $85 billion takeover of Time Warner. If Comcast succeeds in outbidding Disney for Fox, a major cable distributor would control even more channels on its lineup and those of its rivals. There are fears for consumers that it could lead to higher cable bills or hinder online alternatives. Comcast isn’t likely the only mega-media bid in the works. There will probably be a rush to consolidate. Here’s a look at some of the combinations that will transform the media landscape and change how people consume entertainment: Fox with Disney or Comcast
Disney made a $52.4 billion allstock offer for the bulk of 21st Century Fox, including the studios behind the “Avatar” movies, “The Simpsons” and “Modern Family,” along with National Geographic. Marvel would get back the characters previously licensed to Fox, reuniting X-Men with the Avengers.
But Comcast topped Disney on Wednesday with an offer that is 19 percent higher.
For Disney, a successful Comcast bid could make Disney’s planned streaming service less attractive.
Wall Street braced for a bidding war. Shares in Fox increased nearly 8 percent to an all-time high of $43.90. Disney gained more than 2 percent, while Comcast lost more than 1 percent in morning trading Wednesday.
Sprint and T-Mobile
In April, the two telecom companies announced a $26.5 billion combination. The deal would combine the nation’s third- and fourth-largest wireless companies and bulk them up to a similar size to Verizon and AT&T, the industry giants.
The worry is that with just three major carriers, there would be less incentive to keep innovating on prices and service. T-Mobile and Sprint might even raise prices now that they don’t have to try to poach customers off each other.
A 2014 attempt to combine fell apart amid resistance from the Obama administration. But the industry is different just four years later. Wireless carriers aren’t just competing with one another, but also with Comcast and others as the wireless, broadband and video industries converge.
Verizon
Verizon, which bought AOL and Yahoo in recent years, could be on the prowl for other entertainment properties. Verizon wants to challenge Google and Facebook in the huge and lucrative field of digital advertising — and having more content could help. There’s speculation that CBS could be a potential target. With its main wireless rival AT&T becoming even more of a content powerhouse, Verizon might feel the need to grow.
Cowen analyst Gregory Williams suggests, however, that rather than buy an entertainment or media company, Verizon might buy a company that bolsters its network or infrastructure. Cable company Charter or satellite TV company Dish are “ideal candidates,” he wrote in a research note.
CBS and Viacom
CBS has resisted pressure from its controlling shareholder, National Amusements, to merge with Viacom, which also is controlled by National Amusements. The two companies used to be one but separated in 2005.
A combination would reunite CBS’ television business with Viacom’s production studios, similar to the arrangements now in place at NBC owner Comcast and ABC owner Disney.
With Viacom, the $6-a-month CBS All Access streaming service might have a larger library, as Viacom owns MTV, Nickelodeon, Comedy Central and other cable networks.
Smaller movie studios
Rumors have long swirled that Lionsgate might be a potential takeover target by anyone from Amazon to Verizon or even a combined CBS-Viacom entity. Nothing has materialized yet for the owner of the “Twilight” and “Hunger Games” franchises. As a smaller studio, Lionsgate needs to get bigger to compete in the current landscape.
Similarly, Viacom-owned Paramount studio has been on the chopping block before. After years of troubles, it has recently rebounded with the horror film “A Quiet Place” and comedy “Book Club.” That could make it a lucrative takeover target by a company seeking content creators.
The future for consumers
Will people have to pay higher prices for content? U.S. District Judge Richard Leon wrote that the government didn’t prove to him that would be the case. The judge argued that by letting AT&T buy Time Warner, customers would get another choice for video in an age where Amazon and Netflix have changed the rules of engagement.
But skeptics of media consolidation aren’t so sure. Jonathan Schwantes, senior policy counsel for advocacy group Consumers Union, argued: “There is significant opportunity for AT&T to exploit the value of Time Warner’s content in ways that could hurt both consumers and competition alike.”
The future for media
AT&T’s victory shows the way forward for the media industry, which has grappled with a sharp slowdown in the past few years. The decline in pay TV subscribers has blunted businesses once thought to be invincible.
ESPN, owned by Disney, has seen a significant drop in viewership as younger viewers spend more time on platforms like Facebook, Instagram and YouTube. Mergers will allow companies to compete for costlier rights to professional sports, seen as perhaps the only way to keep viewers from cutting the cable cord and to build out their streaming services.