Commentary

Which 4 Media Companies Will Reign Supreme?

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.

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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?

1 comment about "Which 4 Media Companies Will Reign Supreme?".
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  1. Ed Papazian from Media Dynamics Inc, June 20, 2018 at 9:19 a.m.

    Wayne, one issue concerns the relative value of "premium" content to those who have it as opposed to "non-premium" content. As it happens the typical short term profit margins for "premium" TV content---big time sports, primetime dramas and sitcoms, major special events, etc. are far smaller than those made by more mundane "formula" fare such as talk shows, game shows, many types of "reality" shows, 24/7 TV "news" ,etc. In fact the networks offering "premium" content often break even or lose money on them in their initial airings and the real profits are made much later in rerun syndication. Also, in terms of actual consumption, a lot of TV viewing time is allocated to non-premium content, not "premium". This leaves those who desire ownership of premium content to make long and short-term plans for their exploitation---with the shows often serving in loss leader and image enhancment roles at the outset and profit makers over the longer haul.

    I would think that NBCu, CBS,  Disney, etc. are concerned that their near monopoly on "premium" content may be broken by new digital players following in the Netflix mold but luring ad dollars as well. Which means that there may be more competition, not less for thois kind of programming. All should remember, however, that the public is not prepared  to devote more than a certain amount of time to such shows. If a glut of premium content is created, new business plans---often a combination of ad support with subscriber incomes or retransmission fees---will be needed as well as exposure on many platforms.

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About the Author

Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.