• by Mitch Oscar , Op-Ed Contributor, July 16, 2013

2013 is shaping into the year of distribution consolidation – a change of partners. Scale drivers to the tune of nearly $9 billion, to date, as tallied by SNL Kagan.

Broadcast

Major TV stations acquisition forays include:

--  Tribune’s $2.73 billion for Local TV Holdings

--  Gannett’s $2.2 billion for Belo TV stations

--  Media General’s merge with Young Broadcasting

--  Sinclair’s $1+ billion absorption of TV outlets from Fisher, Freedom, Newport, Cox, Barrington and Titan.

More distribution girth should enable the TV stations to augment their leverage when negotiating with TV networks to keep greater percentages of retransmission fees and garner more favorable rewards for participating in the TV networks’ TV Everywhere initiatives. Also, consolidation will generate cost savings from redundancy diminution, i.e., backroom services, sales forces, content licensing, marketing services, as well as providing added muscle in retransmission negotiations with pay TV operators.

Cable

Concurrently with broadcast community commotion, pay TV operators are rumored to be in play. John Malone is back in town – the cable hegemon credited with coining the phrase “500 channel universe” back in 1992 while building the largest cable systems operator in the '70s and '80s called TeleCommunications Inc. (TCI), and then selling it to AT&T in 1999, which transmogrified into Comcast after a $58.7 billion deal in 2002.

John Malone’s Liberty Media has already acquired 27% of Charter Communications, which is run by newly arrived, in cable years, Tom Rutledge, a respected cable industry executive with past lives at Time Warner and Cablevision. Possible targets include any of the top MVPDs:

 

 

Time Warner and Cablevision appear frequently as rumored gist.  And certainly Comcast has the muscle, acumen and acquisitional appetite, after having digested NBCUniversal, to be included in any conversations.

Satellite & Telcos

In the satellite and telco sectors – other than Dish’s deployment of The Hopper, and failed bids for Sprint Nextel and Clearwire to enable them to expand their services with the inclusion of wireless broadband service – all remains quiet on these MVPD fronts.

Rumors have pretty much petered out that DirecTV would be acquired by AT&T. Or Dish by AT&T. I forget which was first. Or that DirecTV and Dish would merge – to date, they have managed a cooperative ad supported sales initiative. Although the telcos certainly have the war chests to support aggression, there seems little tweeted leakage to suggest they will imbibe some time soon. 

Economies of Scope vs. Economies of Scale

In the analog world, scale seemed to be the driving force behind media mergers by getting rid of redundancies with savings immediately being reflected in the bottom line.  Scale was the operational word. The consumer didn’t seem to be part of the equation. Services remained the same and monthly fees rose. 

Hopefully, as media mergers and acquisitions continue to accrue in the remainder of 2013 and entities change partners, these consolidations with also serve to change partners in scope by providing more services, faster internet pipes into the homes, flexible access to professionally scripted TV and theatrical programming Everywhere and on all devices, and improvements in customer service.

From a marketing perspective, one can only hope that these consolidations will change partners to provide more relevant, not “big,” data across televisual platforms, deploy more interactive and addressable applications that engage consumers, offer more robust second screen scenarios, and create and/or distribute original programming which offers greater scope in the creation of content and advertising environs that exploits the intrinsic nature of each screen: TV, broadband, mobile, digital place based and companion devices.