Biden’s antitrust squeeze can grease the wheels of TV deals (column)
The Biden administration made a statement earlier this month when the Justice Department filed an antitrust complaint to block the $ 2.1 billion sale of Simon & Schuster.
Merrick Garland’s body block of the deal ViacomCBS made with Bertelsmann’s Penguin Random House sends the message that the White House is paying attention to the pace of consolidation in media and entertainment. If the antitrust division is worried about too much concentration among the owners of the oldest of mass media platforms – the books – just think about how the attorney general’s watchdogs would view the inter-wedding nuptials. big studios or several big name broadcast and cable assets.
The sudden cooling of the regulatory climate could stoke the flames of another important business trend. There is a growing crowd of investors and private equity groups – like Argus Capital Corp. SPAC run by former CBS big boss Joe Ianniello – who are waiting to pounce on small pieces of old empires that could be sold or split up in the near future. .
WarnerMedia and Discovery will be under pressure to divest certain assets, particularly outside the United States, in order to obtain approval for the $ 43 billion spin-off pact with AT&T that will bring together WarnerMedia and Discovery. AT&T’s eagerness to move from its swan dive into the entertainment arena could make the company a willing seller of covert assets in order to bring the complicated transaction to the finish line.
It seems likely that under the Biden administration, the biggest of the Big Media pack – Disney and Comcast – would struggle to close major M&A deals without having to lose weight by making divestitures first. of assets. Over the past 18 months, Sony Pictures Entertainment has begun the process of separating some of its international channel assets in sales to small private investment groups, including one led by two former Sony Pictures TV Intl. frames. Asset sales are also helping giants like ViacomCBS and AT&T reduce debt.
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Speculation in the market about reputable brands that might be up for grabs is rampant. Cable channels with subscriber bases of 50 million or more are popular because they generate predictable revenue streams, although revenue is set to decline each year as viewers cut the cord and embrace streaming platforms. The idea is to “overcome the drawbacks” and generate profits by carefully managing costs and seeking efficiency gains.
There are unconfirmed rumors that some of the Turner entertainment cable networks may be packaged for sale as part of the Discovery deal. At Disney, big questions have been asked for over a decade about how ABC and Freeform fit into the great Magic Kingdom project, especially in the age of streaming.
NBCUniversal also has a number of established channels in its portfolio that could make an attractive package, à la E! and Oxygen.
In addition to private investors, the largest owners of television channels could be candidates for the sale of the channels. It is believed that Sinclair Broadcast Group lobbied Disney over the possibility of acquiring ABC and its stations owned and operated in the past. Nexstar Media Group already has a national reach through its more than 200 television channels and its NewsNation cable channel. It wouldn’t be a surprise to see Nexstar CEO Perry Sook take on another channel or two if a free-for-all auction emerges next year.
The content market is already undergoing a form of rapid cell division around the world. The combination of regulatory pressure, rising cost of debt and market demands related to mainstream media’s transition to streaming are sure to fuel further industry reshuffles in the months to come.
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