The AT & T agreement, which survived the legal challenge of the US Department of Justice. UU., It will create a monster with an unprecedented mix of assets spanning TV distribution, cable, wireless and broadband programming.
and cable giant Comcast appear to be heading for a bidding war over Fox's assets, including its Hollywood studio and international properties.
For Comcast, the approval of the AT & T agreement reinforces its case with Fox that an agreement between the companies can pass regulators. Comcast is expected to present a cash offer with a substantial premium to the Disney offer of 52,400 million dollars, people close to the situation say.
The AT & T-Time Warner and Fox offerings are the kind that media executives hope to give them the best chance to compete in a world where the superpowers of technology, from
They have interrupted old ways of doing business and consumers are moving away from the cable television package.
As the giants get even bigger, there could be an account calculation for the smaller US media. UU
Lions Gate Entertainment
The combined market values of all these companies are around $ 58 billion, compared to $ 150 billion for Comcast and around $ 285 billion for an AT & T-Time Warner.
The media actions went up after the trading hours after the decision. deal activity Lions Gate and Fox shares rose about 7%, while Disney shares fell more than 1% and Comcast shares fell more than 3% with a bidding war ahead of Fox. Netflix shares They fell about 1% after the failure.
The second level of companies will be under pressure to find their own offers that not only increase their exposure to traditional television, but also give them the scale and the combination of assets. to resist the changes in the industry, say investment bankers and industry analysts.
"The floodgates will open," said Jessica Reif, a veteran media and cable analyst at
Bank of America
The two pillars of traditional TV revenues from cable television subscriptions and advertising are under attack. Netflix has pioneered the sale of model televisions directly to consumers, not through the cable package. And his willingness to pay amazing prizes for programming and links to star producers such as Shonda Rhimes is driving the talent market.
Google and Facebook, meanwhile, have revolutionized advertising, channeling large amounts of data about users to target specific groups of people in a way that TV can not match.
"The combination of new technologies and new entrants … has changed the competitive dynamic in a dramatic way," said Jonathan Levitsky, a merger and acquisition lawyer at Debevoise & Plimpton who has played a role in several large-scale deals. media in recent years. "This cozy ecosystem is being attacked, and those changes are what are driving the desire of people to do business."
In the entire media industry, the magnates calculate if now is the time to leave. 21st Century Fox Executive President
The decision to sell Fox's assets that he had assembled for decades was a powerful signal to many observers that something had fundamentally changed.
"Some of the most iconic media executives are in transition right now and that's a big problem," said Jennifer Nason. , global president of Investment Banking at JP Morgan.
Until relatively recently, mergers between owners of medium-sized television networks seemed a logical response to media turmoil. The idea was that larger programmers could guarantee widespread transport in cable television packages and extract the highest rates.
But those unions may not be enough in a post-cable world where companies will need more scale and resources to program; the technological knowledge to create streaming products for a direct relationship with consumers; and data to attract advertisers, analysts say.
who owns shares in Discovery, Lions Gate and
has been advocating for a roll-up of content companies for years. The Discovery merger this year with Scripps Networks Interactive, HGTV's parent company, was a step in that direction, and Discovery also unsuccessfully sought out the embattled Spanish-language broadcaster Univision Communications Inc., another likely target.
Shari Redstone, whose National Amusements Inc. controls CBS and Viacom, has fostered the merger of those companies. But she is involved in a legal power struggle with CBS and many of its directors, who oppose the deal and are trying to strip her of control of the vote.
Even if the merger happened, it would be unlikely to result in a combined company. with enough scale to compete, said Ms. Reif of Bank of America. The end of Ms. Redstone may be to sell the merged company to a larger player as
judicial documents and people familiar with his thinking have said.
Time Warner, owner of major cable brands such as HBO and CNN, as well as the Warner Bros. studio, fits into AT & T's plans to look for cable TV cable cutters and build robust retail businesses of advertising. The telecommunications giant promised a channel package of $ 15 per month without sports. And it's based on the data from your wireless arm to help direct TV ads to consumers in more sophisticated ways.
Companies are also eager for international growth with the US pay-TV business. UU In the early stages of a secular decline. In the case of the battle for Fox's entertainment assets, both Disney and Comcast are eager to acquire Fox's European, Latin American and Indian companies, even more than some national assets in the mix, such as regional sports networks that were once they considered valuable.  What other buyers might arise? Two of AT & T's rivals in the distribution area, Charter and Verizon, have danced the idea of buying content companies but have expressed more interest in strengthening their "pipelines" through acquisitions.
Google, Facebook and
All are widely seen on Wall Street and among media executives as potential media buyers, in part because of the moves they have already made to disrupt traditional television and film.
Amazon explored the idea of splitting Fox's assets with Comcast – so that Amazon would get the domestic properties and Comcast would get international assets – but the idea did not advance, so Comcast is moving on its own, said people familiar with the matter. affair.
Apple showed interest in Time Warner-HBO in particular And it was thought to launch an offer before its agreement with AT & T, said people familiar with the matter.
Media companies will be looking for partners. "There is no public or private company that is not reconsidering its mix of assets," Reif said.
Write to Shalini Ramachandran at firstname.lastname@example.org
Appeared in the print edition of June 13, 2018 as & # 39; Up Next: Comcast & # 39; s Move on Fox & # 39;