Media mergers: who’s next? –

Media mergers: who’s next? – fr

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In this photo, the HBO Max and Discovery Communications logo is displayed on a smartphone.
Rafael Henrique | LightRocket | Getty Images

NBCUniversal et Lionsgate

Buying Lionsgate would help Comcast’s NBCUniversal on two different fronts. First, it would add more content to Peacock, NBCUniversal’s subscription video service. Lionsgate owns shows such as “Mad Men”, “Orange is the New Black”, “Nashville” and “Zoey’s Extraordinary Playlist”. Lionsgate currently licenses these shows on a number of streaming services.
Second, Lionsgate owns the Starz premium network, which would integrate seamlessly with NBCUniversal’s offerings. NBCUniversal does not have a premium network, unlike competitors WarnerMedia (HBO) and ViacomCBS (Showtime).

On the streaming front, a Starz-Peacock combination – either together as a service or separately as a bundle – could expand NBCUniversal’s global aspirations. Starz is on track to have 60 million subscribers worldwide by 2025, chief executive John Feltheimer said this week. Starz is already available in 58 different countries, which would give Peacock a head start in its expansion aspirations.

And Lionsgate wouldn’t cost much, with a market cap of just $ 3.8 billion (an enterprise value of around $ 6.4 billion). If Comcast is to keep NBCUniversal – unlike AT & T’s decision to ditch vertical integration – buying Lionsgate would be a smart move to stay competitive in the streaming wars without breaking the bank.

WarnerMedia-Discovery et ViacomCBS

There is already speculation about a potential future merger between the new entity WarnerMedia-Discovery (assuming the deal goes through) and NBCUniversal. Discovery’s majority shareholder, John Malone, has told CNBC how the combined company may be open to a future merger with NBCUniversal if regulatory forces allow it.
But the divestments that might take place could be too complicated and tax inefficient for this combination to happen. Regulators might not allow CNN and MSNBC to be hosted under one corporate roof. The combination of Comcast’s Universal and Warner Bros. of WarnerMedia – the 2nd and 3rd largest movie studios in terms of box office revenue in 2019 and 2018, the last full years of theatrical releases – may also be a non-starter.

The most logical combination would be WarnerMedia-Discovery and ViacomCBS.

Shari Redstone’s company has a broadcast network – CBS. WarnerMedia-Discovery doesn’t, so it’s an adjustment. (Combining CBS and NBC under one roof would be a major obstacle to a ViacomCBS-NBCUniversal merger.)

Unlike NBCUniversal, ViacomCBS does not have a large wired information network. This makes maintaining CNN more viable.

While ViacomCBS also has a movie studio, Paramount has had a lot less box office presence than Universal in recent years. Among global movie studios, Paramount was sixth in box office revenue in 2018 and 2019. Gathering Paramount and Warner Bros. would be easier to sell for antitrust issues.

The biggest complication would be if Redstone is willing to give up or dilute its controlling shares of ViacomCBS. That’s what Malone did to push Discovery and WarnerMedia together, so there is now a model.

Disney and AMC networks

This is the most difficult sale. Disney doesn’t really need AMC networks. It is doing perfectly well with the content it has.

But with the Hulu license owned by Disney, much of its content is vulnerable to the loss of some of its hit shows. MGM, for example, does “The Handmaid’s Tale”. Now that Amazon has acquired MGM, it’s unclear whether the series will stay on Hulu once the deal is done.

The owner of “The Walking Dead,” IFC Films and Sundance Now could provide a boost of adult-themed content on Hulu. This would balance the robust offering for kids on Disney + and sports on ESPN +. AMC has forecast that it will have at least 9 million streaming subscribers by the end of 2021 and 25 million by the end of 2025. That’s a far cry from Hulu’s current 41.6 million or 103, 6 million Disney +, but that’s proof that there is at least some audience for the lineup.

And while cable is slowly dying, it’s not dead yet, with an estimated 85 million American homes still subscribing to some form of bundled linear television.

Disney’s ESPN remains the cornerstone of the traditional pay TV package. Bundling AMC Networks’ cable networks with ESPN would protect affiliate fees, as pay TV providers have historically been reluctant to ditch ESPN.

The Dolan family controls the AMC networks. The Dolans have probably known for years that AMC networks are small-scale and should combine with a bigger media fish. If the Dolans don’t want to sell, they won’t. But AMC Networks is relatively small with a market valuation of $ 2.2 billion and an enterprise value of around $ 4 billion. Disney could easily buy the company in cash.

However, previous Disney acquisitions – Pixar, Marvel, Lucas Films – were about intellectual property. Does AMC Networks have enough intellectual property to make a deal worth it for shareholders? And is this intellectual property family-friendly enough to fit into the company’s theme park activities?

Perhaps that is why a Disney-AMC deal has yet to happen.

Disclosure: NBCUniversal is the parent company of CNBC.

WATCH: Amazon’s acquisition of MGM will bring additional value to Prime users: Mark Mahaney

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