Standard General is trying hard to get its Tegna deal done by year's end.

The Federal Communications Commission is currently on day 246 of its unofficial 180-day shot clock for vetting mergers.

In a letter to the FCC Friday (December 23), a copy of which was supplied to Broadcasting + Cable, the company committed to no journalism or newsroom layoffs for at least two years after the merger is approved and closes.

The FCC has sought additional info from the companies on potential layoffs and newsroom cutbacks, which Standard General has said it did not anticipate. 

Also: Deadlocked FCC Still Has Power to Block Standard General/Tegna

It told the FCC it did not expect staffing reductions after that, but "cannot predict how future economic conditions or changes in the broadcast industry may require broadcasters to make adjustments in the composition or size of station staffing to best serve the needs of the public."

The company said that if the FCC wants it to, it will also commit to filing quarterly reports "providing the amount of new investments it has made at the local station level at Tegna, as well as, after the conclusion of the two-year period referenced above, information regarding any layoffs in the newsrooms of the Tegna stations."

Also: Team Telecom OK With Standard General/Tegna Merger

And given the concerns from unions — some of which have challenged the deal — about jobs, the company also told the FCC that Tegna would "recognize each of the labor unions currently covered by a collective bargaining agreement with Tegna as the exclusive collective bargaining representatives of those bargaining unit employees," collective bargaining agreements Standard General said it would require Tegna to honor.

The company last week agreed to waive its "contractual rights to apply after-acquired retransmission rates to the Tegna stations," meaning it couldn't raise retrans rates for Tegna stations to the level of its existing stations, and this week said it would agree to "all of the conditions on the transaction requested by NCTA," specifically not to commit to enter into joint sales, shared services or local marketing agreements between Tegna and the Cox Media Group stations and not to "engage in joint or coordinated retransmission agreement negotiations."

Standard General reiterated that its D.C. newsroom will supplement Tegna news offerings and "will in no way serve to displace local news or local journalists."

Tegna, which owns 64 TV stations in 51 U.S. markets, agreed to be acquired by Standard General in February for $8.6 billion including debt. Tegna also owns multicast networks True Crime Network, Twist and Quest, as well as advanced-advertising company Premion.

Deb McDermott, CEO of Standard General’s Standard Media Group, has written to Tegna newsroom personnel to tell them of the company's commitment to news and news jobs.

Standard General executives have also pointed out that the "complicated" deal structure some have criticized would result in a boost in women and minority ownership of media, an FCC public interest goal. ■

Opponents of the $8.6 billion Standard General-Tegna deal met with top FCC officials this week to talk about the former’s issues with the deal — particularly the documents those opponents say the merging parties should be producing — and the regulator apparently asked for the meeting.

There was some disagreement over who sought the meeting, with some inside-the Beltway deal-watchers saying the Federal Communications Commission sought out the unions, and others that the unions proposed the meeting to the FCC. 

When asked, meeting participant Andrew Schwartzman confirmed the FCC had sought the meeting.

The opponents also talked about why they had standing before the FCC to participate in their challenge to the deal.

According to an FCC document, Schwartzman, counsel for The NewsGuild-CWA and the National Association of Broadcast Employees and Technicians (TNG-CWA/NABET-CWA) and Jon Schleuss, president of The NewsGuild-CWA met with Holly Sauer, chief of the Media Bureau, which is vetting the deal, and David Strickland, media legal advisor to FCC Chairwoman Jessica Rosenworcel.

Also: Standard General Says FCC Comment Extension Could Cost Millions

They told the FCC that it should make the companies fork over their requested case documents. They said the commission has been too lax in “assessing applicants’ [Standard General and Tegna] assertion that various case documents are not 'germane' and thus need not be submitted.”

Also up for discussion was Tegna and Standard General's challenge of TNG-CWA/NABET-CWA standing to oppose the deal, standing the unions argue they have already established, both as organizations and as concerned citizens/viewers.

Also: Groups Say Tegna Deal Will 'Jack Up' Cable Prices

As to Standard General’s and Tegna’s arguments that pay TV subs fall into the “private contractual harms” category that the FCC has not previously found to raise public interest harms, Schwartzman and Schleuss said increased prices, which they argue will be a result of the deal, are a “paradigmatic” consumer-welfare harm.

Last month, the FCC gave the key communications unions and advocacy groups a two-week extension on the Aug. 1 deadline for comment on the proposed merge. ■

Satellite broadband company OneWeb and French satellite operator Eutelsat, which is already an investor in the company, have proposed a $3 billion-plus merger that will help OneWeb better compete with Elon Musk’s Starlink in the satellite broadband space.

The companies are branding the deal as “creating a genuine global leader in satellite connectivity, future-proofing the company and the U.K.’s asset in a highly competitive market where there is considerable consolidation.”

The deal is subject to regulatory approval and includes both U.S. and European licenses.

They suggested the urge to merge was critical to their future success. “The space industry is moving towards consolidation, and we have acted to ensure we have the right scale, funding and business proposition to enhance our long-term future,” the companies said. “We are guaranteeing the development of our Gen2 satellite network and our ability to go head-to-head with the biggest players across new markets, working with customers and governments in new geographies.”

The all-stock transaction would see shareholders of both companies holding 50% of the newly combined operators under the Eutelsat name.

Eutelsat said it will provide funding to expand OneWeb's low Earth orbit (LEO) constellation of broadband satellites.

Eutelsat initially invested in OneWeb in April 2021. 

The Federal Communications Commission approved OneWeb’s satellite broadband service in 2017, one of several such companies, including SpaceX’s Starlink service, that the FCC hopes will provide competition to terrestrial broadband operators.

OneWeb filed for bankruptcy in March 2020 but reorganized later in the year with help from the British government, which took a 33% stake. ■

Standard General (SGCI) has told the FCC that the two-week comment extension it has granted on the proposed Standard General-Tegna merger could cost the company millions of dollars.

SGCI, in opposing a comment extension the FCC ultimately granted, told the FCC that the way the deal is structured the per-share price SGCI has to pay escalates based on the closing date.

It said that if the Federal Communications Commission’s two-week delay only delays that closing by two weeks, the price it has to pay goes up by more than $5 million.

Also: Standard General, Tegna: Deal Opposition Is Legally Irrelevant

SGCI said that given the FCC’s desire that SGCI funds news operations at Tegna at the current or increased levels, “creating yet further delay in this proceeding while driving up Standard General’s costs simply to avoid inconvenience to Movants is decidedly not in the public interest.”

Movants are the NewsGuild-CWA/National Association of Broadcast Employees and Technicians [NABET]-CWA, Common Cause, and the United Church of Christ Media Justice Ministry, which have big issues with the deal.

Standard General agreed to acquire Tegna in an $8.6 billion deal that includes the assumption of $3.2 billion in debt. Apollo Global Management (AGM) is providing some of the funding for the deal. AGM controls Cox Media Group (CMG), which will own some of the Tegna stations if the deal is approved.

Petitions to deny were filed by The NewsGuild-CWA and the National Association of Broadcast Employees and Technicians (NABET)-CWA and Graham Media Holdings.

In seeking the FCC extension, the petitioners said the regulator’s 10-day comment window was too short to develop a full record on the deal, which the unions have petitioned to block, and that the deal was sufficiently complicated to require more time to vet (the deal includes station spinoffs to Apollo Global Management). They also told the FCC that the legal counsel for TNG-CWA and NABET-CWA “has had to schedule unavoidable medical treatment.” ■

The FCC has agreed to give key communications unions and advocacy groups a two-week extension on the deadline for comment on the proposed merger of Standard General and Tegna.

The NewsGuild-CWA (TNG-CWA), the National Association of Broadcast Employees and Technicians-CWA (NABET-CWA), Common Cause and United Church of Christ, OC, had sought the extension from the current deadline of Aug. 1.

They said the FCC's 10-day comment window was too short to develop a full record on the deal, which the unions have petitioned to block, and that the deal was sufficiently complicated to require more time to vet (the deal includes station spin-offs to Apollo Global Management). They also told the FCC that the legal counsel for TNG-CWA and NABET-CWA "has had to schedule unavoidable medical treatment."

Also: Unions Try to Block Tegna Deal

Attorneys for Standard General and Tegna have told the FCC that the petitions to deny their merger are both legally irrelevant and factually incorrrect and should be rejected so the deal can go through -- the FCC has to sign off on the transfer of any station licenses.

The FCC said it was in the public interest to give all parties the extra time to have as "complete a record as possible before final consideration of the applications." ▪️

The NewsGuild-CWA is asking President Joe Biden to urge the FCC to block the purchase of Tegna TV stations by investment fund Standard General and Apollo Global Management.

The guild, the nation's largest union representing journalists, told the president in an open letter circulated widely Thursday (June 2) that the deal “would kill journalism jobs, undermine local news and raise prices for American families.”

NewsGuild-CWA has already asked the Federal Communications Commission to collect more data on the deal before making a decision on whether it is in the public interest.

Also: Tegna Deal Critics Say FCC Needs More Data

In the meantime, it wants Biden to give the commission some direction, though that by definition would have to be short of marching orders.

“Mr. President, you can do something to protect workers, journalists, local news, and hard-working families,“ the guild said. “Please urge the FCC to reject the Apollo/Standard General/Tegna deal.”

The FCC is an independent agency and is charged with making its public interest calls on mergers based on the facts before it. But there is plenty of precedent for Presidents making their feelings known, including President Barack Obama, who called on the FCC to adopt net neutrality rules based on a Title II classification of internet access, and President Trump, who called for regulating edge providers to prevent what he said was anti-conservative bias.

Tegna owns 64 television stations in 51 U.S. markets. It also owns multicast networks True Crime Network, Twist and Quest and advanced-advertising company Premion. ■

The Federal Communications Commission said that if anyone wants to oppose the $8 billion-plus purchase of Tegna's TV station group by investment fund Standard General, they need to speak now, or at least by May 23.

That is the deadline for petitions to deny the deal, according to the pleading cycle for public comment on the deal released by the FCC Thursday (April 21). The FCC has opened a docket on the deal (Docket No. 22162) where oppositions and responses will be filed.

The deal includes both the primary transfer and spinoff deals to get the merger under FCC ownership caps.

Given that Standard General has criticized Tegna management and lost a proxy fight earlier to take over the company, petitions to deny are a definite possibility.

Also: NewsGuild Urges Review of Apollo Financing of Tegna Buyout

Tegna and Standard General filed their application for the deal March 10, which the FCC said this week it has accepted after its initial review, which just means the filing itself appears to be in order. The FCC has now set challenge deadlines of May 23 for petitions to deny, June 7 for oppositions to those petitions, and June 17 for reply comments.

Anyone who files a petition to deny automatically becomes a party to the proceeding. The FCC reminds all parties to raise all relevant issues in their initial filings, rather than, say, coming back with new points in oppositions since the reply comments can only address issues raised in oppositions.

The FCC will not disregard new information if it comes to light after initial filings, but absent that reserves the right to disregard new arguments raised after initial filings.

Tegna owns 64 television stations in 51 U.S. markets. It also owns multicast networks True Crime Network, Twist and Quest and advanced-advertising company Premion. ■

As expected, the Federal Trade Commission has voted to "withdraw" its "flawed" vertical merger guidelines, which were issued jointly by the FTC and Justice under the Trump Administration.

Vertical mergers are ones that combine different parts of the same supply chain (AT&T with its video services and Time Warner with its content production, for example), which DOJ under Trump tried unsuccessfully to block.

The vote is a signal that the commission majority will be unlikely to give as much weight to purported pro-competitive effects of vertical mergers, effects merging companies have been highlighting in pitching their deals.

That decision came at its public meeting Wednesday (Sept. 15). The vote was 3-2 along party lines.

Tech companies from Amazon to Z-Wave had been telling the FTC not to rescind the guidelines, which were adopted in 2020.

Some Democrats had argued that the merger guidelines update under Trump, which was billed as a way to better identify and challenge competitively harmful mergers, still kept a thumb on the scale for those mergers by suggesting they were generally pro-competitive.

FTC Chair Lina Khan said the guidelines had taken some positive steps toward updating policy that had become outdated and inconsistent with agency practice, but said the update also suffered from serious deficiencies, including "improperly suggesting that efficiencies or pro-competitive effects may rescue an otherwise unlawful transaction."

She also said the guidelines' "misguided" discussion of the "purported" pro-competitive effects of vertical mergers would be difficult to correct if relied on by courts. She said the FTC looked forward to working with the FTC on updating the transaction review framework.

In a statement, the Justice Department said it also had issues with the guidelines and also would work with the FTC to update them. The FTC and Justice divvy up antitrust reviews of mergers over a certain threshhold.

Commissioner Christine Wilson had procedural and substantive concerns with the withdrawal. She said the guidelines were supported by sound economics and reflected agency experience and substantial public input. She said the guidelines don't give vertical mergers a free pass, but recognize the actual pro-competitive effects that reviews should take into account.

Commissioner Noah Joshua Phillips said that without sufficient public input or analysis, the agency was removing guidance, while failing to replace it.

Also Read: FTC Accuses Facebook of Surveillance-Based Ads

Also at the meeting, FTC staffers presented highlights from a report on Big Tech purchases that flew under that antitrust threshhold.

The report found that, in aggregate, the five Big Tech companies studied--Google, Apple, Amazon, Microsoft and Facebook--purchased dozens of companies per year between 2010 and 2019 that did not trigger Hart Scott Rodino antitrust reviews. It also found that the large majority of the deals (75%) included noncompete clauses for the founders and key employees of the acquired companies.

The FTC wants to know whether those were efforts to purchase competitors, essentially buying up to monopoly.

The FTC did not break out individual companies to protect sensitive competitive information.

FTC Chair Lina Khan said the report highlighted the systemic nature of Big Tech
"buying their way out of competing." She said the FTC needs to look at whether its reporting requirements are "unjustifiably" allowing such deals to fly under the radar.

She said the FTC has begun to try and close those loopholes. She also pointed to the role of noncompetes in how firms designed their transactions. She said the FTC will look into the use, "and misuse" of those clauses generally as well as in Big Tech deals.

She also said the report could be useful to Congress in efforts to update merger related legislation.

Commissioner Rohit Chopra said the Hart Scott Rodino Act should be amended so that companies need to report more of their M&A activity to antitrust agencies, including those that fall below "today's" threshhold.

He said the FTC should also crack down on "avoidance devices," which he called tricks to keep a deal below the HSR review threshhold, like disguising the real price of a deal using future stock grants and options in an employment agreement.

Commissioner Noah Joshua Phillips called the report a good example of the FTC's use of its special powers. He said that he hoped the document contributed to the broader debate about mergers, but said it was important to be frank about what the data show and don't show.

He said the study was aggregate statistics of only five Big Tech companies, so it is limited in scope. He also said it does not say whether these are representative of tech or the general market. He said that his view is the FTC should be thinking about "smart targeting" its antitrust enforcement.

"Last year’s vertical merger guidelines missed the mark," said Joshua Stager, deputy director of broadband and competition policy at New America’s Open Technology Institute," on the FTC's vote to rescind the guidelines. "They glossed over critical issues, ignored key harms in digital markets, and denied public participation. Perhaps most importantly, they were approved by the slimmest majority possible. To work effectively, the guidelines should reflect consensus. We look forward to working with the FTC to find that consensus and to make our antitrust laws work better under stronger guidelines."

Liberty Latin America said Wednesday that its 49%-owned subsidiary Cable & Wireless Panamá S.A. has agreed to purchase Claro Panamá, a division of América Móvil S.A.B. de C.V. in an all-cash deal that values the business at about $200 million.

Claro Panamá has about 760,000 mobile subscribers and generated about $157 million in revenue in fiscal 2020. In a press release, Liberty Latin America CEO Balan Nair said the deal highlights the company’s commitment to its Panamanian network.

“The integrated business will operate over a network with extensive coverage and invest to deliver innovative mobile products and services for Panamanian consumers and B2B customers, including via leading technologies such as 5G,” Nair said in the release. “We at Liberty Latin America have established our group Operations Center in Panama and see the country as an important digital hub for the region, which we expect to drive growing demand for our full suite of mobile and fixed connectivity solutions. The valuation for the acquisition is consistent with our disciplined approach towards M&A and will be free cash flow accretive on a per share basis.”

Also Read: Liberty Latin America Restructures Executive Team

The purchase, including fees and expenses, will be financed using cash and incremental borrowings at Cable & Wireless Panamá. The deal is expected to close in the first half of 2022.

Lion Tree served as an adviser to Cable & Wireless Panamá on the transaction.

In most new industry segments, contraction tends to follow expansion, which is why the various players in the crowded SVOD field are looking to join forces to gain a competitive advantage. 

They’re looking at the Disney-Hulu-ESPN empire and the upcoming Discovery-Warner-CNN one and realizing that yes, scale really does matter.

Many observers have noted that ViacomCBS and NBCU would make a good combination, were it not for the fact that largely outdated regulations around broadcast TV ownership plus Comcast’s role as a distributor would seem to make a U.S. merger unlikely.

Which was why no one was all that surprised by a recent Wall Street Journal story on how NBCU’s Brian Roberts and ViacomCBS’s Shari Redstone allegedly met to discuss the possibility of joining forces overseas.

This makes sense for a number of reasons beyond just sheer numbers, though those numbers--especially the size of their respective libraries--are nothing to sneer at either.

One of the biggest challenges facing all of the Flixes is, that with the exception of Disney Plus and Discovery Plus, they are largely indistinguishable from each other.

Yes, they all have a few hit shows they are well known for (e.g., Hulu and A Handmaid’s Tale) and their interfaces are slightly different, but overall the original programming on the various services is fairly identical, falling into the “HBO-like” category of edgy, intelligent series aimed at affluent, educated, coastal audiences.

In other words, people similar to the people who run the networks.

This is a great strategy for ensuring you get great feedback from your friend group, but not a very good way to ensure that potential subscribers have a clear idea of what they’re getting when they sign up for your service and are thus unlikely to unsubscribe when whatever series they’re currently watching is done.

Until now, the Flixes have been dealing with the churn issue by moving to weekly releases, hoping that by stretching out a series to three or four months, they can keep viewers hanging on long enough for them to find time to get them hooked on something else.

Not a terrible theory, but not a great long-term plan either.

Netflix alone among the Flixes seems to understand the need to appeal to an audience that is broader than the usual “HBO audience,” and has thus signed up talent like Shonda Rhimes and Ryan Murphy, who specialize in the sort of well done programming that has considerably broader market appeal than say, Fleabag or BoJack Horseman. 

While that’s a very smart strategy, it’s also resulted in articles by members of said coastal elite questioning whether Netflix has lost its “cool”. 

To which, I suspect Reed Hastings’ response is, “If it means we appeal to 70 million people instead of 10 million, then we will gladly keep losing our cool,” Netflix’s ultimate goal being to keep adding subscribers and all that.

But back to NBCU and ViacomCBS.

While there are differences between the two, there’s also a shared aesthetic based on their background as broadcast and cable networks.

It’s a more mainstream aesthetic that’s also more family friendly, though broad enough to encompass everything from Comedy Central to Bravo.

Which is the other strength the two network groups have: a really deep library of well-known programming. 

There’s much focus on originals as a way of keeping track of who is winning the so-called “streaming wars” but the reality is that one way to keep viewers subscribing is to have a really deep and broad library of well known series and movies that they can turn to during the 23 hours when they’re not watching your hit show.

That was, after all, the key to Netflix’s early success, and between them, ViacomCBS and NBCU have a wealth of offerings, everything from The Office to Viacom’s unheralded slate of Nickelodeon series of the nineties and aughts, which have massive appeal to younger Millennials and older Zoomers. (Hence the iCarly reboot.) There’s also all those Paramount and Universal movies.

The other thing they have going for them is name recognition overseas.

This is key when you’re competing against Disney, Discovery and HBO, all of which invested heavily in overseas markets long before streaming was a glint in Reed Hastings' eye.

So while viewers may not know Viacom, they do know MTV and VH1 and Nickelodeon and Sky (now an NBCU property), and even SyFy. Combining all of those networks under one umbrella would go a long way towards giving the combined companies the sort of name recognition that will help them gain some market share from Disney Plus and Warner Bros. Discovery, not to mention Netflix, Amazon and Apple, all of which have massive worldwide name recognition already.

Whether the deal goes through or not is still far from certain--one meeting is just one meeting and there are many strong personalities involved. 

Still, combining forces would be a very smart move for both networks as the battle for subscribers moves overseas. A successful merger might also set a precedent for them to eventually join forces in the U.S., even if it’s just on streaming at first. 

Stranger things have happened.

The Federal Trade Commission has voted along party lines to rescind its policy statement that it would not require prior notice and approval of mergers undertaken by companies that have settled FTC complaints against previous proposed mergers.

Under that policy, the FTC was still able to require either prior notice of approval, FTC Republicans pointed out, but only of deals that it believed were likely to be a threat to competition and consumers rather than all deals proposed by a company that has settled a previous merger proposal.

Democrats supporting the reversal said the policy tied the FTC's hands when it came to aggressive enforcement of antitrust laws and would save staff time that is currently spent investigating clearly anticompetitive mergers, often undertaken by serial deal filers.

Republicans said the FTC was punishing the companies that had worked with the FTC to settle earlier deal proposals, and thus would discourage such settlements.

That vote came after a similar 3-2 vote earlier this month to rescind an Obama-era (2015) bipartisan policy statement that, using a “consumer welfare” standard, it would only challenge actions that cause or are likely to cause harm to competition, “taking into account any associated cognizable efficiencies and business justifications.”

Both moves were meant to send the signal that the FTC is going to get tougher on merger antitrust reviews.

Mediaocean agreed to acquire Flashtalking, combining its budget management capabilities with the ability to serve ads in digital environments.

Terms were not disclosed, but according to published reports Mediaocean is paying $500 million for Flashtalking.

Also Read: Mediaocean Agrees to Acquire 4C Insights

The deal comes at a time when ad tech companies are either merging or going public as the industry consolidates. Mediaocean reportedly is also considering an initial public offering.

Also Read: Flashtalking, Viant Team Up To Prevent OTT Ad Fraud

“As we continue to innovate, it’s crucial to have technology that enables us to meet the moment for consumers,” said Deborah Wahl, CMO of General Motors, in a statement provided by Mediaocean. “It’s encouraging to see companies like Mediaocean and Flashtalking come together to deliver on the omnichannel advertising imperative. The industry needs a neutral and independent player in the ecosystem to enable media convergence.”  

Also Read: Mediaocean Launches TV Reach Extension Capability

Flashtalking and Mediaocean have been working together since 2018. Together they handle about $200 billion in annual media spending and 1 trillion monthly ad impressions.

Merger and acquisition activity in the media and telecom sector continued to pick up steam as the pandemic waned in the first half of 2021, according to a new report from PwC.

There were 410 deals announced in the six months preceding May 15th, worth $83 billion, according to PwC, up from 61 deals in the second half of 2020 and just 32 in the first half of 2020. The value of the deal is the highest PwC said it has seen in years.

“Deal volumes continue to be driven by the internet and information, advertising and marketing and telecommunications subsectors,” the report said. “Private equity deals reached a new high in terms of both deal volumes and value, accounting for 43% and 66%, respectively.”

Among the big deals so far this years was AT&T’s decision to get out of the media business by spinning off WarnerMedia and merging it with Discovery. 

“This announcement was the biggest sign yet that telecom giants were reversing course on their plans to expand into the media space,” PwC said. “It followed on the heels of Verizon’s disposal of HuffPost and Yahoo/AOL, T-Mobile’s discontinuation of its TVision streaming service and AT&T’s own spinoff of DirecTV into a joint venture with TPG Capital.”

At the same time, the streaming wars have media companies bulking up on content, The combination of WarnerMedia and Discovery is one example. Another is Amazon’s purchase of MGM Studios for $8.45 billion. 

“Players in the media and telecom sector are starting to feel the stress brought on by the enormous capital requirements needed to compete and maintain relevance during this period of transformation, leading to a wave of asset reallocation,” said Bart Spiegel, media and telecom deals partner at PwC.

Amazon said it agreed to acquire MGM for $8.45 billion, giving the tech company a foothold in Hollywood as it takes on competitors in the video streaming wars.

The acquisition gives Amazon access to more than 4,000 films and key franchises including James Bond and Rocky, plus 17,000 TV shows including Fargo and The Handmaid’s Tale.

Read Also: Amazon-MGM Deal Talks Advance

“The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team. It’s very exciting and provides so many opportunities for high-quality storytelling,” said Mike Hopkins, senior VP of Prime Video and Amazon Studios.

Hopkins is a former Fox, Hulu and Sony executive. Amazon has its subscription streaming business in Amazon Prime Video, which comes as part of the Amazon Prime shopping and delivery service, as well as ad-supported channels Twitch and IMDb TV.

Read Also: Amazon Reportedly in Talks To Buy MGM for Around $9 Billion

“It has been an honor to have been a part of the incredible transformation of Metro Goldwyn Mayer," said Kevin Ulrich, chairman of the Board of Directors of MGM. "To get here took immensely talented people with a true belief in one vision. On behalf of the Board, I would like to thank the MGM team who have helped us arrive at this historic day. I am very proud that MGM’s Lion, which has long evoked the Golden Age of Hollywood, will continue its storied history, and the idea born from the creation of United Artists lives on in a way the founders originally intended, driven by the talent and their vision. The opportunity to align MGM’s storied history with Amazon is an inspiring combination.”

The Amazon move comes with Netflix established as the leading player in the streaming business, with The Walt Disney Co. charging hard on its heels with Disney Plus, Hulu and ESPN Plus. Media observers with long memories noted that Ted Turner jumped at the chance in the mid 1980s to buy MGM from investor Kirk Kerkorian, using the film library to launch Turner Classic Movies.

Last week, AT&T made a deal to spin off its WarnerMedia unit and merge it with Discovery to create an entity large enough to compete with the leaders. Between WarnerMedia, which runs HBO Max. and Discovery, which launched Discovery Plus earlier this year, the combined company spends $20 billion on content.

Speaking at the  J.P. Morgan Global Technology, Media and Communications Conference, Discovery CEO David Zaslav said he was happy with the Amazon-MGM deal because of the value it puts on content.

“It’s all about the IP,” Zaslav said. He recalled people saying that Disney overpaid for Pixar and Star Wars, but that those business have both generated billions in revenues and become pillars supporting the success of Disney Plus.

“So we look at what Warner has, and it’s the greatest treasure of global IP that’s loved by everyone in the world, with the treasure we have, and you look at the value of MGM and you say ‘wow.’ What does that mean we’re worth if we can make this all come together? And I think we can,” he said.

Scott Schiller, chief commercial officer at digital media company Engine, said the Amazon-MGM deal is the tip of the iceberg as tech companies take a stepped-up approach to content and streaming video.

"The next likely scenario is a more aggressive merger or acquisition of one of the remaining traditional assets, like an NBCUniversal  or ViacomCBS,” Schiller said.

After COVID-19 slowed merger and acquisition activity in the media and telecommunication sector during 2019, deals will be driven by a shift to streaming, according to a new report from PwC.

As big entertainment companies followed consumers’ new consumption patterns, the will want to acquire or develop content, particularly as they expand internationally and require more localized content to compete.

The report noted that cloud and app-based services, digital publishers, podcasting and video game publishers have all become more attractive acquisition targets as advertising budgets became focused on digital mediums and consumers turned to at-home.

Also Read: AT&T Sells Crunchyroll to Sony for $1.175 Billion

On the other hand, businesses that rely on in-person audiences or production and traditional advertising could become takeover targets as their need for funding grows.

“While the Media & Telecom sector was able to pivot to a virtual marketplace during COVID with relative ease, there is no doubt that people miss the personal experiences generated through live events, and we anticipate a full recovery post-COVID. We wouldn’t be surprised to see legislation, regulations and depressed valuations assist in this recovery,” said Bart Spiegel, US Media & Telecom Deals leader.

There were 612 announced deals in the media and telecommunication sector worth $99 billion over the past 12 months, according to the PwC report. 

Also Read: Scripps Goes National By Buying Ion for $2.65 Billion

“Broadly speaking, the sector was one of the most resilient ones during the pandemic, with deal activity remaining largely flat when compared to 2019,” PwC said. The year was off to a fast start, but slowed when the pandemic hit.

The pandemic forced companies to reconsider their core strategies. Large companies pushed their digital strategies, including streaming, data driven advertising and building 5G networks. Those companies also divested non-core assets to generate cash.

Altice USA CEO Dexter Goei said he has received “very supportive” feedback from Cogeco shareholders since his company paired with Rogers Communications to launch an unsolicited bid for the Canadian telecom company. And though he said he is still pursuing a deal despite a rejection from Cogeco’s controlling shareholder, he stopped short of saying he would increase his offer.

Altice and Rogers launched their $7.8 billion bid for Cogeco on Sept. 2 and almost immediately were rebuffed by Cogeco’s ruling Audet family, which said it had no intention to sell. While some have speculated that Altice will likely raise its offer to keep the deal alive, the Audet’s have insisted their rejection was not a negotiating tactic. 

At the Goldman Sachs Communacopia conference on Tuesday, Goei wouldn’t say whether Altice USA plans to increase its bid. But he said he has received a lot of positive feedback from shareholders outside of the Audet family. 

“We remain committed to the process and we  look forward to hearing back at some point from the board,”  Goei said at the conference. “We’ve gotten, as you may suspect, very supportive feedback from shareholders of the target who would like to see us engaged in a process. I think there's just a question of time in terms of if we are able to engage here and what form it would take.”

Altice USA still sees M&A as the most effective path to growth, adding that the company has had success in squeezing more revenue and profit out of small assets.

“We’ve never shied away [from the idea] that M&A is the best return for our shareholders,” Goei said, adding that while Atlantic Broadband is well run, he believes Altice USA can make it even more profitable. 

“We think we can do a better job going forward, not only on the cost side of the business,” Goei continued. “Each of the businesses we’ve acquired -- at Cablevision and at Suddenlink -- we’ve been able to accelerate top line growth, whether it’s in the existing footprint in cable, but also the ancillary businesses whether it be B2B, advertising or mobile.  We feel good about our opportunities about taking smaller businesses in cable and driving great integration and top line growth.”

Media and telecom merger and acquisition activity in the first half of 2020 fell 19% to 259 as the industry dealt with the effects of the coronavirus, according to a new report from PwC.

The value of those deals was down 37% to $31 billion, PwC said.

PwC said that M&A could help companies deal with the disruption caused by the pandemic. 

“The current economic environment will likely force companies to be a bit more introspective in identifying specific assets or businesses which they don’t believe will contribute to their earnings growth in the future. With the current crisis hitting on the heels of several years of massive consolidations, companies are sitting on various non-core assets that are ripe for divestiture,” the report said.

Companies will be looking for operation efficiencies and merging with competitors could be a strategy to help that. An atmosphere where downsizing is prevalent is likely to attract private equity investors, PwC noted. 

M&A could accelerate if the government changes some of its rules, notably the FCC’s cap on TV and radio station ownership. PwC also noted that late last year, the Justice Dept. filed a motion to terminate the decrees that prevent studio ownership of movie theaters.

House Antitrust Subcommittee chairman David Cicilline (D-R.I.) is leading a push by some Hill Democrats to include a moratorium on all but distress sale mergers during the pandemic.

They want to add a provision to the next COVID-19 aid bill that prevents any corporate mergers that "do not involve the purchase of a severely distressed company."

They argue that "powerful corporations and private equity firms" are ready to unfairly exploit the crisis for their own financial gain unless Congress steps in to insure that companies use cash reserves to help employees, not "acquire more power," as backer Alexandria Ocasio-Cortez (D-N.Y.) said in a statement.

Cicilline, Ocasio-Cortez and others wrote to House Speaker Nancy Pelosi (D-Calif.) and Minority Leader Kevin McCarthy (R-Calif.), citing mergers during the great recession.

"Mega-mergers and corporate takeovers permitted by enforcers during the last economic crisis led, in several major instances, to the firing of millions of workers, slowing of investment in innovation, and huge increases in executive bonuses," they said. "Amid the current crisis—with millions of Americans facing unemployment and millions of businesses facing potential extinction—the antitrust agencies are once again swiftly approving corporate deal-making. If Congress does not act, predatory mergers and takeovers will enable a small number of investors and executives to further concentrate wealth and control at the expense of workers and independent business."

Adstream, a United Kingdom-based digital asset management firm, said it has acquired Deluxe Entertainment Services Group's AdServices business. Terms were not disclosed but the deal was described as in eight figures by the buyer, which hopes to gain more of a presence in the U.S. and Canadian TV and video service delivery markets. Matthew Ruffi, who had been senior vice president of operations for Deluxe AdServices, becomes Adstream's chief operating officer, North America.

The advertising technology mergers-and-acquisition area has been quite active lately, including the announcement earlier today that Norway-based Telenor Group had purchased Tapad Inc. for $360 million; Cannella Response Television's deal in late January to buy programmatic-ad vendor AdMore's parent, Media Properties Holdings; and data analytics firm Acxiom's acquisition of the data unit of Allant Group.

In a release, Adstream CEO Gerry Sutton said: “This is a significant step that will expand our DAM and delivery business in the North American market and drive our growth globally. We have been very impressed with the Deluxe AdServices team, their service ethic and clients. The expanded company will have a notable advantage in servicing key U.S. and global clients. We look forward to working with the new team, clients and existing partners in providing exceptional service and value to the market.” 

London-based Adstream said its Adstream Technology Platform allows agencies and brands to collaborate, review and store all forms of marketing content as well as delivery across multiple channels in a single system. 

Adstream's Deluxe AdServices is an established player in the North American advertising delivery market and has experienced significant growth in recent years though a strong focus on customer service and technology development. This year it will deliver between 10%-20% of all Super Bowl spots to be aired during the game.