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Media Companies Are Ready to Sell. Does Anyone Want to Buy?

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davideduardo

davideduardo

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From Bloomberg: Media Companies Are Ready to Sell. Does Anyone Want to Buy?

The media business is ripe for consolidation, much as publishing and music before it. Companies are sitting on assets, namely TV networks, that are profitable but declining. As they try to keep pace with Netflix, Apple, Amazon, YouTube and others, their best bet is to join forces. That’s why Jeff Bewkes and Rupert Murdoch cashed out.

Yet many analysts worry companies have missed their window. “Everyone wants to sell their TV networks and nobody wants to buy them,” Rich Greenfield, co-founder at LightShed Partners, told me by phone Friday.

This, of course, affects radio which is part of "media" but, I guess, not significant enough for Bloomberg to mention it.

This may be behind a firewall. I have a subscription so I can't really tell. But those two paragraphs give the essence of the topic.
 
Fox (the company not the news network) did the right thing at the right time. They have their piece of the pie with Hulu. The Murdochs should be lighting their cigars constantly over the smart moves they made. I’m surprised people keep thinking Netflix, Amazon, Apple will be major tv players. Why would they make the same mistakes tv companies have made? Buying tv networks does nothing for them except add eventual unnecessary debt. No one else thinks the streaming bubble will burst?
 
Loverofradio said:
Fox (the company not the news network) did the right thing at the right time. They have their piece of the pie with Hulu. The Murdochs should be lighting their cigars constantly over the smart moves they made. I’m surprised people keep thinking Netflix, Amazon, Apple will be major tv players. Why would they make the same mistakes tv companies have made? Buying tv networks does nothing for them except add eventual unnecessary debt. No one else thinks the streaming bubble will burst?
Click to expand...
I think the big difference is that AppleTV, Netflix, and Hulu took a huge financial risk by dumping tons of money into creating/producing unique content for streaming. So far that content amounts to the old 'loss leader' formula, where they likely don't recover the cost of producing the programming but are building the business model as consumers become more accustomed to streaming. In spite of traditional TV networks becoming resigned to the use of DVR's for a VOD world, networks have continued recreating the same old thing; sitcoms, police dramas, late-night comedy, game shows, and talk shows. Wait, streaming is a thing??
Okay we'll start a streaming service where people can watch our sitcoms, police dramas, late-night comedy, game shows, and talk shows whenever they want!
 
DavidEduardo said:
From Bloomberg: Media Companies Are Ready to Sell. Does Anyone Want to Buy?

The media business is ripe for consolidation, much as publishing and music before it. Companies are sitting on assets, namely TV networks, that are profitable but declining. As they try to keep pace with Netflix, Apple, Amazon, YouTube and others, their best bet is to join forces. That’s why Jeff Bewkes and Rupert Murdoch cashed out.

Yet many analysts worry companies have missed their window. “Everyone wants to sell their TV networks and nobody wants to buy them,” Rich Greenfield, co-founder at LightShed Partners, told me by phone Friday.

This, of course, affects radio which is part of "media" but, I guess, not significant enough for Bloomberg to mention it.
Click to expand...

Radio followed a different path---divestiture rather than consolidation (which was limited even after de-reg).

The legacy major radio broadcasters---ABC, CBS, NBC, Westinghouse, etc., all got out long ago.
 
Loverofradio said:
No one else thinks the streaming bubble will burst?
Click to expand...
There is an argument that the streaming bubble has already burst. Few, if any, of the traditional networks' streaming platforms are currently profitable.

According to Disney financial filings, Disney+ is still a money loser.
NBC's Peacock burned nearly $2.5 billion last year.
I don't believe Paramount Global break out profits for Paramount+, which probably means they aren't profitable segments either.

Meanwhile, Netflix has been a consistent money maker for several years now.
 
Loverofradio said:
Fox (the company not the news network) did the right thing at the right time. They have their piece of the pie with Hulu.
Click to expand...

Not anymore. Hulu was part of the Disney acquisition of 20th Century Fox four years ago. And Hulu's now a coin-flip for Disney---sell it or fold it into Disney+?

Loverofradio said:
I’m surprised people keep thinking Netflix, Amazon, Apple will be major tv players. Why would they make the same mistakes tv companies have made? Buying tv networks does nothing for them except add eventual unnecessary debt.
Click to expand...

The glory of being Netflix, Amazon or Apple is how much money you have. Debt is probably not going to be an issue. Any acquisition of a network would likely be cash, stock or some combination of the two.

What it does for them is give them additional content, branding and revenue. Only part of that would come from retransmission and affiliation fees for network television. Remember, every one of the traditional three TV networks comes with a movie studio---CBS/Paramount, NBC/Universal, ABC/Disney.

I would expect the sale of any owned station groups prior to a sale, though---Netflix, Amazon or Apple (why isn't Google in this conversation?) don't want or need those. But it can make money providing programming to OTA affiliates while that's still a business (likely a decade or less), then move that content to streaming.

Loverofradio said:
No one else thinks the streaming bubble will burst?
Click to expand...

Technology, once it reaches a certain point, doesn't go backward. We're still watching TV instead of 3D TV because that tech didn't hit that point. Streaming is already past that point and still growing.
 
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PTBoardOp94 said:
There is an argument that the streaming bubble has already burst. Few, if any, of the traditional networks' streaming platforms are currently profitable.

According to Disney financial filings, Disney+ is still a money loser.
NBC's Peacock burned nearly $2.5 billion last year.
I don't believe Paramount Global break out profits for Paramount+, which probably means they aren't profitable segments either.
Click to expand...

Right, but...

PTBoardOp94 said:
Meanwhile, Netflix has been a consistent money maker for several years now.
Click to expand...

Which means the problem isn't streaming. It's the money Disney, Peacock and Paramount+ have spent trying to achieve in a few years the scale Netflix has built over more than a decade.
 
michael hagerty said:
Remember, every one of the traditional three TV networks comes with a movie studio---CBS/Paramount, NBC/Universal, ABC/Disney.
Click to expand...
I don't see where Disney has any interest in selling their movie studio(s) at this time. They are only talking about the ABC network as possibly being "non-core." Movies still dive other Disney segments, including the parks.
 
DavidEduardo said:
Yet many analysts worry companies have missed their window. “Everyone wants to sell their TV networks and nobody wants to buy them,” Rich Greenfield, co-founder at LightShed Partners, told me by phone Friday.
Click to expand...

It's a great article and something I've been saying here for a long time. Technology makes it possible for anyone to become a media company without any of the traditional assets such as transmitters, towers, or "networks." The internet is the world's biggest network, and it's an OPEN network, which means anyone can access it. On the other hand, the traditional networks such as ABC are closed. They were that way by design from their inception in the 1920s.

Companies such as Amazon, Apple, Netflix, YouTube, and the rest already have their own networks. Some even own their own radio services. They are completely unregulated and don't require government licenses. There are no ownership limits on the number of networks they can own. Why would they want to pay billions of dollars for something that is far more limited? It makes no sense.
 
michael hagerty said:
I would expect the sale of any owned station groups prior to a sale, though---Netflix, Amazon or Apple (why isn't Google in this conversation?) don't want or need those.
Click to expand...

Google is part of the conversation through YouTube. That is their TV network.

Traditional OTA media is not a growth area. It is similar to POTS for AT&T. It's something that is paid for, and simply issues bills for service. AT&T would love to offload it, but it's regulated by the government, and there are no buyers.

I'm thinking of other similar companies, and consider RKO General. Once a great media company, it's now a holding company that holds assets and generates money from those assets. Westinghouse is a similar company that exists to manage its licenses and patents. Eastman Kodak is another. iBiquity sold the patent for HD Radio to another holding company that exists to manage and monetize the patent. This may be the future of these traditional media companies.
 
Commenting while taking a couple vacation days from work-

Consider thinking of content and delivery method as two separate things. Over time content and delivery methods can adjust to each other, but fundamentally, initially, they are not connected.

Streaming is a delivery method, formats and shows are content.

I think the traditional broadcast network is mostly about economy of scale for the production of content. It scaled up the local over the air broadcasting delivery method.

Streaming delivery method is already scaled up (unless constrained), and has greater incremental costs than over the air delivery method. Streaming has major advantage of one to one, interactive connection with each audience member. So far the public does not seem concerned with privacy when using streaming.

It might not be a question of networks vs streaming, but rather content creators adapting to changing audience behavior. The media story of the century may be audience indifference to their own personal privacy.
 
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RadioGuy1864 said:
I don't see where Disney has any interest in selling their movie studio(s) at this time. They are only talking about the ABC network as possibly being "non-core." Movies still dive other Disney segments, including the parks.
Click to expand...

IF this happens, and by "this" I mean any of the big tech folks (Amazon, Apple, Netflix, Google) buying, they won't have interest in the TV networks as stand-alone properties. If that's the deal, they won't do it.

As BigA rightly says, the tech companies have their own networks. What the studios give them is more production capability and greater scale.

But because people have such strong opinions about what Disney is and isn't, let's look at CBS instead. If Amazon pitches Shari Redstone on a deal for the right money where they take it and Paramount, does she say no? If Netflix dangles the right deal in front of Comcast for NBCUniversal?

And again---IF (BIG IF) this happens, they're not taking the owned stations groups. They have zero interest in owning TV stations. The current owners spin those before the sale---likely to venture capital groups.

But is there money to be made in the next few years by being a network without an owned station group---from retransmission and affiliate fees in 200+ markets before cutting them loose and rolling that content over to streaming? Yeah, I think there is.

As always, we'll see.
 
PTBoardOp94 said:
There is an argument that the streaming bubble has already burst. Few, if any, of the traditional networks' streaming platforms are currently profitable.

According to Disney financial filings, Disney+ is still a money loser.
NBC's Peacock burned nearly $2.5 billion last year.
I don't believe Paramount Global break out profits for Paramount+, which probably means they aren't profitable segments either.

Meanwhile, Netflix has been a consistent money maker for several years now.
Click to expand...
Make it only streaming for it to work. Shut down the broadcast networks and make them streaming networks.
 
michael hagerty said:
Radio followed a different path---divestiture rather than consolidation (which was limited even after de-reg).
Click to expand...

That's what I said in the thread about the death of linear TV. Everything that is happening now to linear TV happened in radio over 20 years ago. Truthfully the march of heritage owners from radio began in 1988, when GE, NBC, and several other legacy owners left radio. The rise of radio-only companies in the 90s happened because radio no longer was the kind of investment that an insurance company might want to own. No other companies wanted to buy radio, so radio companies went to investment companies like Bain or Forstmann. That's what's brought radio to where it is now. Those investment companies will end up owning the big radio companies (through equity assumption after bankruptcy) because the companies are not self-sustaining, and no one else will buy them.
 
Loverofradio said:
Don’t have the number. But, if its not, as we’ve seen streaming is no better
Click to expand...
Depends on which streamer.

Netflix has been profitable for 20 years.


Hulu's been profitable since the third quarter of 2021.

As I said in an earlier post, the issues Disney+, Apple+, Paramount+ and Peacock are having with profitability are largely tied to the amount of money they've spent in three or four years to try to get to the same scale Netflix has built in 20 years and Hulu has built in 15.
 
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