Charter Communications’ pending $77.7 billion purchase of Time Warner Cable isn’t expected to stop the flow of deals in both the distribution and content areas, experts at a Paley Center for Media event said.
“I think we’re on the verge of a significant uptick in activity,” said JP Morgan global chairman, Technology, Media & Telecommunication Investment Banking Jennifer Nason at the Paley Center for Media’s 2015 Paley International Council Summit here Thursday. “We are sort of in this disruptive vs. incumbent world in just about every industry you can think of and media is no exception. With OTT taking hold, ad models being disrupted, I think there is a lot of concern out there by all players, the established ones and the new ones, as to do I have the right assets in the right location, who are my competitors. I think when you go through periods where there is concern about what tomorrow will look like, there’s the overwhelming temptation to do deals to feel better about your position in the ecosystem.”
In the session moderated by Multichannel News/B&C editorial director Mark Robichaux, Waller Capital Partners chairman John Waller said he expects deals to move away from the typical large-company-buys-small-company scenario and instead focusing on adding new aspects to existing businesses in content, technology and distribution.
“Although some of the bigger companies will be involved, a lot of the deals will be in those three sectors,” Waller said. “It will be opportunistic buying, media companies buying digital media companies or ad tech companies, or cable companies buying fiber companies. It will be opportunistic mergers to make their business better.”
Waller added that while the climate today is different than the last big period of consolidation in the industry – the 1990s and early 2000s – the reason for deals isn’t that different
Back then, he said, the bet was on building a broadband business. And now that the infrastructure is built, the bet is the same but with a twist .
“The bet is still on broadband, but there is so much data consumption,” Waller said. “Cisco says 90% of data consumption comes through WiFi. That means you still need broadband pipe.”
Nason said that wireless, over the top and xx are attracting other players to the media business. And she said that more are likely to come.
“Traditional players have to find out how to evolve,” Nason said, adding that we will likely see some great and not so great deals in the future. She pointed to 21st Century Fox’s aborted attempt to buy Time Warner Inc. in 2014, which didn’t attract other bidders after their overtures were rejected.
“If Time Warner was to sell today, the people that would jump into that race would be very different today,” Nason said, adding that possible bidders could be consortiums of international buyers and big technology companies.
“A lot has changed in the last 12 months,” Nason said. “There is a different universe of competitors.”
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