Media Companies Looking To Merge?

ImageNow that their main customers (CableCos, TelCos) have consolidated their side of the market for tv shows, can we expect the media companies that produce the content to follow suit?

Now that Comcast-TWC and AT&T-DirecTV are set to become giant content distribitution platforms via Pay-TV and VoD, there seems to be some motivation for media houses and smaller Pay-TV channels to form alliances in order to regain some leverage when bargaining with these new giants that stand for half of all US Pay-TV customers.

According to a WSJ article, cable networks like AMC could look to team up with medium-sized media companies like Viacom who themselves could become targets for big guns like Disney or CBS. One of the expected players is 21st Century Fox who have billions to spend and might look at Time Warner, home of CNN. “Consolidation might not seem to have much positive impact in the short term, but could really benefit content and channels companies over time by providing negotiating scale and diversity of product,” said Michael Morris, a media analyst at Guggenheim Securities. Other driving factors include international growth and content-licensing revenues.

Shareholders’ demand for dividends and boosting stock prices through buybacks as well as regulatory issues could work against any large mergers and acquisitions.
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