The coming wave of media mergers may figure that “premium” content -- and new digital apps -- are the X factors.
Big legacy media companies continue to seek the right formula to keep pace with growing digital media -- especially when it comes to sluggish advertising sales.
Fox has decided it will not be in the game -- it can't keep pace with Netflix, which is spending $8 billion this year on TV and film production, a number that only seems to grow. Other digital competitors are making it that much harder.
For this year, MoffettNathanson Research says NBCUniversal will spend $11.4 billion ($7.8 billion for TV content; $3.6 billion for film production); Walt Disney will spend $9.4 billion ($5.8 billion for TV, $3.6 billion for film); and Time Warner and 21st Century Fox will spend $8.7 billion and $8.6 billion, respectively.
Netflix is just behind -- at $7.9 billion ($7.1 billion on TV and $800 million on film).
There is also Amazon, which could spend $4.5 billion next year on TV production, and Apple, at $1 billion. And then there are other TV production players: Viacom, CBS, Discovery, Hulu, and AMC Networks.
Fox is now focused on live sports, TV news content and to a lesser extent, reality TV. Whatever Fox's entertainment scripted needs are, they will buy from other sources.
Those pursuing Fox -- Comcast and Walt Disney -- know that if they can keep pace with Netflix, as well as Amazon and Apple's TV-video efforts, there is hope -- partly buoyed by their more media-diverse businesses.
Comcast has a number of TV platforms and well-established brands and a wireless and cable business. With Disney, it is much the same, with its still-solid ESPN brand, as well as strong theme parks/resorts.
Amazon and Apple are just dipping their toes in the water; TV/movie production is one among many of their businesses -- Amazon is the omnipresent e-commerce company, while Apple is the popular personal electronic/computer device manufacturer.
Does Netflix have any of this? Nope. Better question: Do they need any of this?
Consumers have lots of choices. Still, Netflix has devised a way to establish big brand value for “premium” content. That must be a major concern. Steve Burke, CEO, Comcast's NBCUniversal, believes pursuing Fox for premium TV content will create new consumer-facing platforms and business. That will hopefully increase ad sales and subscription revenues.
What does this all this mean? That four or five major big media/communications players, per analysts, control most of the premium TV content business -- which would include some TV distributing platforms, cable, satellite, wireless, whatever.
For consumers, this might be an easy decision: Choosing among a few big TV providers, not hundreds of OTT apps. The downside? What everyone worries about when it comes to consolidation: higher price. The bigger question: Which four?