Now that we have got Warner Bros. Discovery, and MGM under Amazon, things are looking up.
The last set of mergers were Discovery and Scripps, AT&T and Time Warner, Comcast and Sky, Viacom and CBS, and Disney with most of Fox.
Given
all of those deals, there are fewer companies remaining to find dance
partners. It's also great that NBCUNiversal and Paramount Global are not going to merge.
I have reviewed the combinations of companies that might make strategic sense.
NBCUniversal and Lionsgate - RIGHT
Buying Lionsgate will help Comcast’s NBCUniversal on two different fronts. First, it would add a whole lot of content to Peacock, NBCUniversal’s subscription video service. Lionsgate owns shows including “Mad Men,” “Orange is the New Black,” “Nashville” and “Zoey’s Extraordinary Playlist.” Lionsgate currently licenses those shows to a tontine of streaming services.
Second, Lionsgate owns premium network Starz, which would fit effortlessly with NBCUniversal’s offerings. NBCUniversal doesn’t have a premium network, unlike competitors Warner Bros. Discovery (HBO) and Paramount Global (Showtime).
On
the streaming front, a Starz-Peacock combination -- either together as
one service or separately as a bundled offering -- could expand
NBCUniversal’s global expectations. By 2025, Starz is on track to have 60 million
global subscribers, Chief Executive John Feltheimer said last Mat. Starz is already available in 58 different countries, which would give Peacock a head start in its expansion aspirations. (Pretty cool huh?)
And Lionsgate wouldn’t cost much, with a market capitalization of just $3.8 billion (an an enterprise value of about $6.4 billion). If Comcast is going to keep NBCUniversal -- bucking Warner Bros. Discovery’s decision to give up on vertical integration -- buying Lionsgate would be a practical move to stay competitive in the streaming wars without breaking the bank.
Warner Bros. Discovery and Paramount Global - WRONG
Since Warner Media and Discovery have already merged recently, let me tell you about this horizontal merger.
I really saw how today that NBCUniversal, and Warner Bros. Discovery are number 2 and 3 at the box office.
The combination of Warner Bros. Discovery and Paramount Global would be wrong.
The reason is Warner Bros. Discovery has Cartoon Network, and Paramount Global has Nickelodeon, and the fact is that WBD should have a broadcasting network called The WB, which should be relaunched.
WBD has CNN, so Paramount should have its own cable news network.
Paramount has been staying behind four other major movie studios, so let's just forget about that.
If WBD and Paramount have merged together, years into the future, the Nicktoons would be under Disney.
Disney and AMC Networks - RIGHT
Right now Disney doesn’t really need AMC Networks.
But with Disney-owned Hulu licensing so much of its content, it’s in danger to losing some of its hit shows. MGM, for example, makes “The Handmaid’s Tale.” Now that Amazon has acquired MGM, it’s unknown if the series will remain on Hulu once that deal closes.
The owner of “The Walking Dead,” IFC Films, and Sundance Now could produce an adult-themed content boost to Hulu. That would balance out the robust kids’ offering on Disney+ and sports on ESPN+. By the end of 2021 and 2025, AMC has forecast it will have at least 9 million streaming subscribers and 25 million more. That’s diverse from Hulu’s current 41.6 million or Disney+’s 103.6 million, but it’s proof that there’s at least some audience for the programming.
And while cable is slowly dying, it’s not obsolete yet, with about 85 million U.S. households still subscribing to some form of bundled linear TV.
Disney’s ESPN remains the character of the traditional pay-TV bundle. Bundling AMC Networks’ cable networks with ESPN would protect affiliate fees, as pay-TV providers have always been hate to drop ESPN.
The Dolan Family controls AMC Networks. The Dolans have likely known for years that AMC Networks is subscale and should combine with a bigger media fish. If the Dolans don’t want to sell, they probably won’t. But AMC Networks is relatively small at $2.2 billion in market valuation and about $4 billion in enterprise value. Disney could easily buy the company in cash.
However, Disney’s previous acquisitions -- Pixar, Marvel, Lucas Films -- have been for intellectual property, and Fox must have been a nightmare. Does AMC Networks own enough beneficial IP to make a deal worth it for shareholders? And is that IP family-friendly enough to coincide with the company’s theme park business?
That may be why a Disney-AMC deal hasn’t already happened.
