What's Next?

It was revealed yesterday that Sprint is in talks with Charter to merge.  For both parties, it would be in response to the consumer preference to have one-stop, discounted bundles for all telecom and media needs as the two industries continue to converge.  What makes things a bit more interesting in this case is that Charter and Comcast agreed in May to get each other’s blessing if they planned to sign a deal with a wireless company.  

And, then, there is the question of who else is talking or should be talking?  Verizon and …?  Disney and …?  CBS and …?  Viacom and …? T-Mobile and …?  Netflix and ...? I get the feeling that before the music stops, we will have a handful of media/telecom super giants that “do it all”.  Is that what consumers want?

Have the Democrats improved the odds of the AT&T-Time Warner Merger Being Approved?

When AT&T and Time Warner announced their merger plans last year, the immediate reaction by many politicians and some others was that the mega media deal was too big and would negatively impact the competitive landscape of the media industry. 

Nine months later, Trump has come around, seemingly less concerned about the concentration of power, in spite of his disdain for CNN, one of Time Warner’s key assets.  Meanwhile, Democrats are still not fans of the deal as revealed in a seven-page letter to the DOJ penned by a group a prominent players in the party (e.g. E. Warren, B. Sanders).  The opening paragraph of June 21 letter reads:

“We have strong concerns that the combined company's unmatched control of popular content and the distribution of that content will lead to higher prices, fewer choices, and poorer quality services for Americans - substantial harms that cannot be remedied with unreliable, unenforceable, and time-limited behavioral conditions. Our constituents face significant and growing costs for telecommunications services. Before initiating the next big wave of media consolidation, you must consider how the $85 billion deal will impact Americans' wallets, as well as their access to a wide-range of news and entertainment programming. Should you determine that the substantial harms to competition and consumers arising from the transaction outweigh the purported benefits, you should reject the proposed acquisition.”

Given their high level of dislike for each other, will this letter actually “encourage” the DOJ (Jeff Sessions) to approve the deal?  I think it just might!

Content, Content, Content

On Tuesday, it was revealed that Discovery Communications and Scripps Network were in advanced talks to merge.  If it happens, non-fiction content assets such as Discovery, Animal Planet and OWN would be combined with HGTV, Travel Channel, and the Food Network.

Without a doubt, the move is in response to threats, namely increased consolidation among distributors and cord-cutting.  Larger Pay-TV providers pitted against smaller content owners “win” in retransmission negotiations, especially if the content is not highly valued by viewers.  The creation of lower priced skinny bundles that may or may not have space for less in-demand programming fortifies the challenges faced by the likes of Discovery and Scripps.  But, does a combined firm change any of that?  I believe it does/will not.  The programming has to be better – more engaging and more interesting.  Without that, viewers, particularly millennials, will not have a willingness to pay, regardless of the scale and scope of the firm that owns them.