Checkmate!

We knew it had to come.  When MVPDs, specifically Comcast and AT&T, announced that they were combining with rival distributors, namely Time Warner Cable and DirecTV, respectively, in order to bulk up and push back on rising programming costs, it was only a matter of time before content providers countered.  The first to move was 21^st Century Fox in its attempt, announced yesterday, to acquire Time Warner.  While Time Warner rejected the first bid, more likely than not, a deal will happen.  Where will this leave us? 

Consumers want content they can watch anywhere, at any time.  Distributors have to provide the platforms (TV, broadband, mobile); all of them preferably.  Content providers have to offer programming that is “in demand”, both in live sporting events and highly valued shows that consumers want to watch when initially aired.  Who is out front on all of this?  Certainly, Comcast is in good shape with its pay-tv and broadband pipelines and its NBC/Universal content, but it lacks a mobile play.  AT&T/DirecTV has mobile, but it lacks programming depth.  Disney is all about content, but that is okay in an industry where content is king.  The 21^st Century Fox move is about amassing content…a good move.

Firm	Pay-TV Distribution	Broadband	Mobile	Programming (cable, broadcasts)
Comcast/Time Warner Cable	X	X		X
AT&T/DirecTV	X	X	X	limited
Verizon	X	X	X
Dish	X
21st Century Fox/Time Warner				X
CBS				X
Viacom				X
Discovery Communications				X

In this wave of consolidation, who makes the next move?  Rivals like Viacom which has gotten significant push-back from both small and large cable operators over higher costs for their “I can watch that later” programming, may need to do something.  Discovery Communications is in a similar situation.  CBS has some great programming, but it may want to ramp up. 

Then, what’s next?  Will distributors like Verizon, Dish, and Charter be forced into doing something?  Where does it end?  In a matter of six months, from the time the Comcast-Time Warner deal was first announced, the media world has potentially been upended.  Where will it end?  How will regulators respond?  That is, how much consolidation is good for the industry, good for consumers?  How do you strike the balance?  Unfortunately, that is not easily answered in a very dynamic, rapidly evolving industry, some of which is technology-driven, some of which is from a shift in taste preferences, and some of it is “created” by the firms themselves.  Regulators will have to sort it all out.