The domino effect has started in media industry. Comcast did not wait and decided to move token with an offer for entertainment assets Twenty First Century Fox, a day after a federal judge in United States gave green light to merger between AT T and Time Warner. The cable operator, owner of NBC Universal, puts on table 65 billion of dollars, surpassing 52.4 billion that Disney pacted Rupert Murdoch.More information
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The maneuver can lead to a real bid if Murdochs opt to take Comcast's offer into account. That would force Bob Iger, CEO of Disney, to sweeten terms of agreement that is already closed. Part with advantage, because Comcast already made an attempt before, but was rejected by Fox. To reassure investors about competing side risks, it furr points out that 75% of assets are outside United States.
Comcast's offer improves by almost 20% of Disney's. The payment would be made to Fox in cash. Brian Robert, CEO of cable operator, admits in letter he sent to Murdoch family that he felt "disappointed" when he decided to enter into an agreement with Bob Iger. "We hope that with this offer we will respond to all doubts raised by previous offer," he says. In particular it is equivalent to paying 35 dollars for each action of assets outside of New Fox.
If Murdoch finally decided to step back and allow Comcast to enter direct fight with Disney for its assets, bid winner will be made with franchises like Avatar and X-Men, as well as with all its network of regional sports chains and cable channels such as FX and National Geographic. For Comcast It is a way of gaining scale, not only in USA, but also in international market. It's something Disney is looking for.
The race for consolidation in media industry is launched, following decisive legal accolade that gave Tuesday a federal judge by unconditionally authorize merger between telecom operator AT T and Time entertainment conglomerate Warner. In this way, a distributor and a content provider will focus on same structure, a combination that will have ramifications over next few decades. The decision is decisive for or similar operations in media industries.
The merger, which was blocked in November by Justice Department, is similar to one starring Comcast cable operator and NBC Universal Entertainment Group just under a decade ago. But at time, streaming platforms of Netflix and Amazon or intrusion of Google and Facebook in advertising business did not represent a threat so evident to old Colossus. AT T is thus endowed with a powerful weapon to compete.Shortcut
Stifel analysts anticipate that "everything will go very fast" after this judicial decision, because it allows to prop up legal status quo in force regarding mergers of companies that do not compete directly. Companies that create content, y explain, need to have direct access to consumer in order to offer m programs y want to consume. For ir part, Telecos seek to offer new services to attract more customers and raise ir income.
AT T and Time Warner's operation is valued at 85.4 billion dollars. Netflix, Amazon, Facebook and Apple are in parallel to allocate huge sums of money to produce original content. It is one of arguments used AT T to defend purchase of Time Warner. The operations carried out by traditional companies in media and telecommunications industry could, in turn, lead major technology to acquire studies such as Paramount or A24.
The last time in America a vertical merger was denounced as it was four decades ago. The magistrate himself made mention during process magnitude of case and its importance. He also made a mention of presenting his final opinion to enormous power that technological signatures gained in generation and distribution of content during last years.
The Justice Department lawyers used as an argument to oppose merger that operation of AT T, owner of DirecTV, and Time Warner would leave industry in hands of two vertically integrated giants. What's more, he suggested possibility that y could coordinate to limit growth of streaming platforms. Netflix is leader of Lejos in this new reality, but Apple is one with most resources at hand.
Movements in entertainment industry are not new, but breakthrough of se powerful actors is changing dynamics. CBS and Viacom have long been trying to re-integrate, but negotiations between ir management teams are completely stagnant. AT T Case Judge Richard Leon expressly cites in his verdict that traditional channels lose audiences, because ir clients are migrating to services offered by technology.
The judge's decision was met one day after new rules came into force to regulate access to network, anor argument for technology to study what ir purchasing options are. Or providers of Internet and mobile telephony like Verizon, which already controls AOL and Yahoo, could participate in process of consolidation in progress. While T-Mobile and Sprint can use ir opinion also as an argument to defend ir merger.