The Africa Channel has promoted veteran media executive Narendra Reddy to executive vice president and general manager.

Reddy, formerly executive vice president of content & Global Operations for TAC, will be responsible for all operations related to The Africa Channel, including its recently announced production arm TAC Studios, said network officials.

Prior to joining TAC in 2014, Reddy served as general manager for Dream Works Animation India, a division of DreamWorks Animation, SKG, providing oversight for all aspects of the studio’s operations as well as being involved with global strategic planning for the company. 

"Narendra has been instrumental over the last 12 months in laying out a compelling vision for The Africa Channel,” said Elrick Williams, TAC's President & CEO in a statement. “In this short period of time he has demonstrated leadership, fiscal responsibility and a results-driven attitude that makes him a great asset to our senior leadership team. I look forward to working closely with him as we continue to expand TAC¹s footprint globally."

As Wall Street still waits for more consolidation among video distributors, many such companies are eyeing deals to buy content assets that they had jettisoned just a few years ago to unlock hidden value.

So-called vertical integration, the marriage of distribution and content under one corporate roof — owning the pipe and the water — has always looked better on paper than in practice. For pay TV providers, owning a large block of the content they make available to customers would seem to lead to lower programming costs and greater exclusivity.

But operators found out the hard way several years ago that isn’t necessarily the case. As the industry grew, Federal Communications Commission programming- access rules made it virtually impossible to have truly exclusive content. With that need to make carriage deals as arm’s-length transactions, limiting any possibility for deep discounts, there was little value in keeping programming and distribution together.

Several companies cut the vertical cord by spinning off content assets over the past two decades, including AT&T and Liberty Media in 2001; Cablevision Systems (now Altice USA) with both MSG Networks (2010) and AMC Networks (2011); Viacom and CBS in 2006; and Time Warner Inc. and Time Warner Cable in 2009.

The rationale behind each split was varied, but the transactions shared a common theme: Unlocking the value of content that was hidden inside what was, at the time, a lower-growth distribution business.

As the industry moves toward an over-the-top model, where mobility and slimmed-down content packages rule the day, some believe that putting those assets together makes more sense.

Viacom and CBS will probably be the first to inch toward reconciliation, as both have put together committees of independent directors to look into a combination, with the blessing of largest shareholder National Amusements. Some analysts see that as more of a horizontal move, as CBS and Viacom both produce programming. Nonetheless, some are beginning to warm up to the idea of putting distribution and content together again.

CONSOLIDATION’S NEXT PHASE

The change of heart comes just as phase one of a continued consolidation wave among distributors winds down. In the wake of megadeals like Charter Communications’s acquisitions of Time Warner Cable and Bright House Networks; AT&T’s purchase of DirecTV; Altice USA’s purchases of Suddenlink Communications and Cablevision Systems; and even Comcast’s abandoned attempt to buy TWC, the thought is that the industry will now turn its M&A attention toward content.

The big difference is Internet video, which has changed attitudes toward vertical integration, Barclays analysts Kannan Venkateshwar and Amir Rozwadowski noted in a recent report.

“In our opinion, distributors have the ability to subsume all content under their aggregation umbrellas, which makes the whole concept of cable networks irrelevant,” the Barclays analysts wrote.

There have already been a smattering of content/distribution deals: Verizon Communications purchased a 24.6% stake in digital content producer AwesomenessTV in April, and Comcast purchased DreamWorks Animation for $3.8 billion in TV in August, to name two.

Technology platforms that help further monetize video also have been a focus with Comcast’s purchases of Visible World and investments in BuzzFeed and Vox Media, and Verizon’s AOL and Yahoo buys. Others could follow suit.

“We would not be surprised if other distributors were to potentially embrace larger opportunities in the content arena over time,” Venkateshwar and Rozwadowski wrote.

There appears to be no shortage of candidates. Speculation has been high that AT&T, fresh off its $48.5 billion purchase of DirecTV last year, is on the hunt for more content.

Not everyone is convinced that vertical integration is making a comeback, though. Telsey Advisory Group media analyst Tom Eagan said that while there could be a few horizontal deals on the horizon — Viacom and CBS being the prime example — he doesn’t expect to see any moves toward vertical integration.

“I think there has definitely been some MVPD horizontal integration, and there’s definitely been some content integration, i.e. Lionsgate and Starz. But we haven’t seen any vertical integration since Comcast-NBC,” Eagan said.

CONFLICTS ARISE

Even Comcast’s 2011 purchase of NBCUniversal — vertical integration’s shining star — now has a slight tarnish because Comcast is conflicted in certain transactions, Eagan noted. For instance, increased retransmission-consent fees benefit the content side of the business, but could hurt the operation’s cable portion.

“There’s more of an internal conflict,” Eagan said.

Comcast has claimed that retrans fees from NBC went from $0 when it bought the broadcast network in 2011 to an expected $800 million this year.

MoffettNathanson principal and senior analyst Craig Moffett also doubted the chances for a vertical-integration wave. In an email, he said the economic theory behind the vertical-integration concept is guaranteed supply or guaranteed distribution. Neither notion applies to media, he said.

“What’s left is mostly just exclusivity, and unless you believe that the program-access rules are going to sunset, exclusivity is illegal,” Moffett wrote. “I get the appeal on a superficial level, and I even get the grass is always greener argument, but the historical evidence for real synergy between content and distribution is extremely thin. If the program access rules do sunset, however, then it’s a completely different ballgame.”

Eagan was also skeptical of the earlier idea that that content companies would seek to combine in an effort to battle larger distributors, such as Charter Communications, which more than quadrupled its size after purchasing Time Warner Cable and Bright House Networks.

“The old-media model was getting beachfronts,” Eagan said. “Every new cable-network channel was a new beachfront to growing higher ad fees and more affiliate revenue. That’s not the game anymore. If you don’t have great content, it doesn’t matter if you have another beachfront.”

Still, AT&T is reportedly in the hunt for more content, and has kicked the tires on several media properties over the past year, including Starz (which was purchased by Lionsgate in June for $4.4 billion) and Yahoo (purchased by Verizon in July for $4.8 billion). According to a Bloomberg News report, AT&T CEO Randall Stephenson has a list of 40 to 45 companies that he constantly monitors, including peers and potential targets, as he plans his next move.

Adding more content seems to fit in with AT&T’s mobility strategy, which is further proffered by its planned launch of a new over-the-top service, DirecTV Now, later this year. DirecTV Now will have more than 100 live and on-demand channels targeted at younger viewers. AT&T has signed several content carriage deals in the past few months to fuel the service, including with NBCU, Disney, Discovery Communications, A+E Networks, Turner Broadcasting System and Scripps Networks.

MOBILE MOVES

Both AT&T and Verizon have been active in the deal market and see mobility as the future of the distribution business. While Verizon has focused more on digital assets for its mobile go90 service, AT&T could take a more traditional route, with some analysts predicting that Time Warner Inc. could end up in its crosshairs.

Time Warner and AT&T officials declined to comment.

Time Warner has arguably been in play since 21st Century Fox abandoned its unsolicited $80 billion offer for the programmer in 2014. Since then, Time Warner has launched HBO Now, a standalone OTT product for its flagship premium channel HBO, and set an Oct. 19 launch date for FilmStruck, with the Criterion Collection.

But along with cable networks like TBS, TNT, CNN and Cartoon Network, Time Warner also creates a large number or movies and television shows through its Warner Bros. Studios arm. Warner Bros. Television Group produces such cable and broadcast TV hits as The Big Bang Theory, The Flash, Gotham, Rizzoli & Isles, Shameless, Supergirl and Westworld.

Time Warner would attract a high price — Venkateshwar has estimated that a deal could be done for about $97 billion, including assumed debt — which could limit the players willing to make a bid.

Perhaps fueling the deal speculation is the relative sluggishness of content stocks over the past year, as uncertainty around OTT, skinny bundles and declining subscribers have sent some investors for the exits. Disney, which had its stock price rise fourfold between 2010 and early August 2015 from about $31 to $121.69, saw a 20% decline later that month, after it was revealed that its flagship ESPN network had lost about 7 million subscribers over the past few years. While Disney stock over the long haul is up by about three times its 2010 levels, it hasn’t fully recovered from the August 2015 dropoff. Shares were at $92.59 on Oct. 4.

Other content stocks have fared the same: 21st Century Fox, Discovery Communications, and Viacom are all down in the double-digit percentages from last August.

At the same time, distribution stocks — bolstered by continued broadband growth, consolidation speculation and a resurgence in video subscribers — have been on the rise.

Granted, consolidation has reduced the number of publicly traded distributors from six to four with the acquisitions of Time Warner Cable and DirecTV. But the four that remain are up a collective 30% since August 2015, driven by Charter’s consolidation-spurred 28% rise and a 5% gain at Comcast, currently the only vertically integrated cable operator.

Comcast first announced its plans to purchase a 51% stake in NBCUniversal — including the NBC broadcast network and 16 cable channels such as USA Network, Syfy and Bravo — in 2009. In 2013 it went all in, buying the remaining stake in the programmer from General Electric for about $16 billion.

In the past five years, Comcast has managed to rejuvenate NBCU’s content business, with the broadcaster atop the current TV-season ratings among 18-to-49-year-olds for the third straight year and cash flow nearly doubling from $3.7 billion in 2010 to $6.4 billion in 2015. The content side has also helped fuel Comcast Cable’s on-demand efforts.

Nowhere is that more evident than in Comcast’s August airing of the 2016 Summer Olympic Games from Rio de Janiero, where it offered more than 7,000 hours of content through live broadcasts on NBC and 11 cable channels; on-demand, through its X1 platform; and streamed online. Though overall ratings were down for the 2016 Olympics, Comcast still made about $250 million from the Games.

The Barclays analysts see even more synergies for Comcast as the nation’s largest cable operator moves into the wireless business. Comcast has activated an MVNO agreement with Verizon that would allow it to resell that carrier’s wireless service under its own brand, and has said it expects to launch a product next year.

BOON FOR WIRELESS?

Venkateshwar and Rozwadowski believe that wireless, with its heavy video component, could make content ownership even more important.

“Over the last few years, however, with mobile broadband, smartphones, Internet video streaming, and e-commerce becoming mainstream, as well as consumers and advertisers starting to look across platforms for content, the ecosystem finally is at a place where cross-platform monetization is more achievable,” the analysts wrote.

Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak said it makes sense for Comcast to continue to dip into the content trough, but doubted other distributors would make the plunge.

“It may make sense for Comcast to bolster its existing NBC operations to do deals and potentially realize substantial synergies,” Wlodarczak said. But Comcast and Charter might do better to set their sites on a wireless carrier such as T-Mobile, he argued, adding that such a play would eliminate the telcos’ only advantage over cable and could present huge synergies by allowing the MSOs to offload wireless traffic onto their own WiFi networks.

“The good news for cable is that getting into wireless is a lot easier than the RBOCs getting into cable’s core business, super-fast terrestrial broadband,” Wlodarczak said.

As the private jets returned from Allen & Co.’s annual media mogul summer camp in Sun Valley, Idaho, last week, speculation around possible deals in the content sector grew louder.

Allen’s conference has been the petri dish for several huge media mergers over the past several decades — including The Walt Disney Co.’s 1995 purchase of Capital Cities/ABC, Comcast’s 2009 acquisition of NBCUniversal and Verizon Communications’s 2014 purchase of AOL.

And this year’s soirée comes at a pivotal point in the content business, as programmers contemplate adding scale to compete against heftier distributors like Charter Communications and Altice USA, as well as subscription video-on-demand services such as Netflix.

At the same time, boardroom turmoil at Viacom — Shari Redstone, a company director and Sumner Redstone’s daughter, was a much-watched figure at the Allen conference — could set the deal wheels moving at full speed. Analysts would like to see Viacom and its former bandmate CBS reunite, but there is also the possibility the parent of MTV, Nickelodeon and Comedy Central could continue to go solo or attract the attention of a larger suitor, such as 21st Century Fox.

Consolidation has always been an option for programmers in a land of giant distributors. Most analysts expected a wave of deals after Charter made its first overtures to Time Warner Cable in 2013, starting with Fox’s aborted $80 billion takeover of Time Warner Inc.

MERGER FEVER RETURNS

Content merger fever waned in 2015, when stocks fell sharply over subscriber-loss concerns. But deal activity has begun to pick back up, with last month’s $4.4 billion Lionsgate-Starz merger and NBCUniversal’s $3.8 billion purchase of DreamWorks Animation.

Download "Media's Free Radicals," a guide to the content consolidation possibilities. 

According to research company Mergermarket, which tracks the number and value of media deals globally, 260 transactions worth $43.9 billion were announced in the first half of 2016, up 91% from the $23 billion announced in the same period in 2015. That pace is expected to continue.

Mergermarket TMT Group Sector editor Ed Mullane said in an interview last week that more deals will come in the wake of Starz-Lionsgate, as programmers look to insulate themselves from larger distributors demanding lower prices and skinnier packages, as well as SVOD companies that are pumping billions of dollars into original programming.

“Lionsgate and Starz is an example of two companies that didn’t have the scale to compete against the new players and the incumbent players,” Mullane said.

Netflix, which has committed to spend about $6 billion on content in 2016, also is driving consolidation talk, especially among smaller programmers.

“How are production companies going to compete against that?” Mullane asked. Bigger may be better.

THE LIONS’ DEN

Lionsgate, which many pundits see as cable legend John Malone’s latest consolidation vehicle — he owns 4.5% of Lionsgate and is the largest individual Starz shareholder — is expected to go back to the deal well. And it makes sense in that Malone’s hands are tied on the distribution-deal front, at least for the near term, as Charter focuses on integrating its $78.7 billion purchase of Time Warner Cable.

On a conference call with analysts after the Starz transaction was announced, Lionsgate vice chairman Michael Burns said the Starz deal “would not preclude us from additional acquisitions.”

Wunderlich Securities media analyst Matt Harrigan said he believes Lionsgate will reenter the deal fray within the next 18 to 24 months, but its potential targets are unclear. Movie studio Metro-Goldwyn-Mayer is a possible target, as is Viacom’s Paramount Pictures, which is in the process of selling off a minority interest.

While in the past some pundits have pointed to another Malone holding — Discovery Communications — as a target, particularly because of its reality programming, that value diminished after Lionsgate’s purchase of Pilgrim Studios late last year.

For Harrigan, the most likely consolidation candidates are Viacom, CBS and Time Warner Inc., for two simple reasons: Viacom and CBS shouldn’t have been broken up in 2009 in the first place, and Time Warner’s corporate structure — it has no overly dominant shareholder — makes it ripe for a takeover.

Rupert Murdoch’s 21st Century Fox, which abandoned its $80 billion pursuit of Time Warner Inc. back in 2014 after the Time Warner’s board of directors nixed that deal, could rethink another bid. Adding to the speculation is that Time Warner’s stock has fallen below the $85-per-share threshold of the old Fox bid.

Back in 2014, one of Time Warner’s biggest arguments against the merger was that it could surpass the per share valuation of the Fox off er, which it did for a period. But like other media stocks, Time Warner shares have fallen, as pressures from over-the-top and subscription video-on-demand providers and a weak advertising market have taken their toll.

Time Warner stock is up about 15% ($9.87 each) so far in 2016, but the shares are down 14.6% in the past 12 months. Like many programming stocks, Time Warner never fully recovered from the August 2015 sector bloodbath in the wake of Disney’s revelation that sports programmer ESPN had lost subscribers. It was also the last time that Time Warner shares traded above the $85-per-share mark Fox set in its aborted takeover bid.

Typically, weak stocks and readily available capital — despite the economy, debt is still cheap — lead to deals.

“The obvious target is Time Warner,” Mullane said. “It doesn’t have the ownership structure that large companies do. Everyone would target Time Warner.”

A Viacom-CBS deal makes sense in that adding broadcast network CBS could give cable programmer Viacom additional leverage during carriage negotiations. For CBS, the benefits are less evident, and Harrigan said that a recombination could attract attention from regulators.

“Gigantism can be a little unhealthy,” Harrigan said.

Adding to the fray is the emergence of several Chinese companies into the U.S. entertainment sector. Focus Media, a Chinese advertising and media conglomerate, has said it plans to invest heavily in sports and entertainment properties. Other players like e-commerce company Alibaba and conglomerate Dalian Wanda Group have focused on movie studios, but could turn their heads toward pay TV content.

Still, Harrigan said he doesn’t see an imminent combination of major media properties because of the regulatory angle. For example, he estimated that a Fox-Time Warner hookup would create a company that generates about 40% of total linear TV production through its 20th Century Fox and Warner Bros. studios. That concentration, he said, has little chance of cutting the regulatory mustard.

Moreover, the top five programmers already have a “ridiculous amount of eyeballs,” Harrigan said, so adding another huge company to the mix doesn’t necessarily solve any problems.

Plus, with the advent of skinny bundles, consumers want packages of fewer channels, not more networks being forced on them from a mega-programmer with dozens of channels.

SMALL BUT MIGHTY

Indeed, for all of Malone’s emphasis on “free radicals” in the programming business, there’s no guarantee that bigger is better. Some of the most-watched and respected shows on TV are coming from smaller networks like AMC, which has the top-rated show on cable, The Walking Dead. AMC Networks CEO Josh Sapan said as much at last month’s Gabelli & Co. Movie & Entertainment conference.

“Big is better if it’s really good stuff, and big is worse and is a weight if it’s not really good stuff ,” Sapan said at the conference. “You would rather not have that weight because it will actually burden your fair reward for what you have that is performing.

“Scale’s good if the stuff punches at or above weight,” he added. “Scale’s bad if the stuff punches below weight.”

There is an argument for both philosophies, Harrigan said, adding that having multiple networks can help insulate a programmer from a chilly ratings spell.

“If you’re hot and you’re small, people want the content,” Harrigan said. “But if you hit a cold streak, you’re irrelevant.”

Government regulators overseeing merger reviews have no problems with Comcast/NBCU's $3.8 billion deal to buy DreamWorks animation.

That is according to the list of deals granted early termination of their antitrust reviews by the Department of Justice and Federal Trade Commission.

Any deal valued at north of about $75 million (it is occasionally adjusted) must get a Hart-Scott-Rodino antitrust review.

The early termination means that the government found no reason to block the deal or sue to apply conditions that would address anti-competitive concerns.

Following the completion of the transaction, DreamWorks Animation CEO and co-founder Jeffrey Katzenberg will become chairman of DreamWorks New Media, which will comprised the company’s ownership interests in Awesomeness TV and NOVA. Katzenberg will also serve as a consultant to NBCUniversal.

The deal is expected to close by year's end.

Mike Farrell contributed to this story.

Netflix will debut its DreamWorks Animation-produced series Puss in Boots on Jan. 16, the OTT streaming service announced Monday.

The animated series will premiere with five, 22-minute episodes on the streaming service, with new episodes to debut throughout the year, said company officials.

“Action, comedy, adventure and heart combine with a dazzling visual style to make The Adventures of Puss in Boots both unique and timeless,” said Margie Cohn, head of television for DreamWorks Animation in a statement. “Puss is a hero for the ages. “

Netflix also announced Monday it will partner with actor Edward Norton to premiere an original documentary My Own Man.

The documentary, produced by Norton, will premiere March 6 and reveals the sometimes painful truths that are often left unspoken between fathers and sons. The film made its debut at the Tribeca Film Festival in April 2014.

Longtime Turner programming executive Michael Wright is switching from the small to the big screen.

It didn’t take Wright -- who has been serving as president and head of programming for TNT, TBS and Turner Classic Movies -- long to find a new gig, as he was named CEO of DreamWorks Studios. Wright, who has not worked in theatricals, will succeed outgoing DreamWorks CEO Stacey Snider. He will start his new gig on Jan. 3, 2015.

“I have had the pleasure of working alongside Michael for many years and have come to know him as a talented executive whose creative vision, leadership, and passion are a perfect fit for our company,” said DreamWorks chairman Steven Spielberg, to whom Wright will report. “He has a keen understanding of storytelling and how to deliver those stories in every shape and size, regardless of platform. I am delighted to welcome him to DreamWorks Studios.”

Miniseries Into the West and drama Falling Skies emanated at Amblin and then onto TNT's air. The studio, working in conjunction with TNT Original Productions, is slated to premiere Public Morals on the service next year. 

Turner announced last week that Wright, a 12-year veteran of the company, would depart. The company has initiated voluntary buyouts and been engaged in an executive reshuffling under CEO John Martin.

Wright will not be involved in DreamWorks television unit, Amblin Television, which will continue to be headed by Daryl Frank and Justin Falvey.

A contender to replace Steve Koonin, who left as the head of Turner Entertainment Networks last spring to become CEO and an equity player with the NBA”s Atlanta Hawks, Wright seemed to be under fire when Time Warner chief Jeff Bewkes said during an earnings call with analysts in April that he was not satisfied with TNT’s ratings performance and that it hadn't taken enough creative risks.

Instead, Wright’s departure comes as TNT topped cable’s Nielsens this summer, buoyed by Michael Bay’s The Last Ship and strong performances by mainstays Rizzoli & Isles and Major Crimes. 

Wright’s Turner tenure was highlighted by the development of The Closer, the Kyra Sedgwick procedural that ranked as basic-cable top ratings performer in its day, as well as the acquisition of The Big Bang Theory, a syndicated, stacking gambit that helped push TBS well up the Nielsen charts in primetime.