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Media Confluence: Who’s Next?

This image shows the HBO Max and Discovery Communications logos. displayed on the smartphone

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NBCUniversal and Lionsgate

The purchase of Lionsgate will help Comcast’s NBCUniversal in two different areas. First, it will add additional content to Peacock, the NBCUniversal subscription video service. Lionsgate owns shows including “Mad Men”

;, “Orange is the New Black”. ‘, “Nashville,” and “Zoey’s Extraordinary Playlist.” Lionsgate currently licenses those shows to the streaming service.

Second, Lionsgate owns the premium network Starz, which will fit perfectly into the NBCUniversal offering. NBCUniversal doesn’t have a premium network. Unlike competitors like WarnerMedia (HBO) and ViacomCBS (Showtime).

On the streaming page, Starz-Peacock integration – whether combined as a single service or separately as an integrated offering – could expand NBCUniversal’s global inspiration. Starz is reaching 60 million global subscribers by 2025. Chief Executive John Feltheimer said this week Starz is now available in 58 countries, giving Peacock a kick start in its expansion ambitions.

And Lionsgate won’t cost much, with a market cap of just $3.8 billion. If Comcast maintains NBCUniversal – defies AT&T’s decision to end vertical integration – buying Lionsgate would be a reasonable move to stay competitive in the streaming wars. without breaking the bank

WarnerMedia-Discovery and ViacomCBS

There is speculation about future mergers and acquisitions that may occur between entities. WarnerMedia-Discovery newly created John Malone, Discovery’s controlling shareholder, told CNBC how the combined company could be open to future mergers with NBCUniversal if regulators allow it.

But potential divestments may be too complex and tax inefficient for that combination. Regulators may not allow CNN and MSNBC to be under the same organization, combining Comcast’s Universal and WarnerMedia’s Warner Bros., the 2nd and 3rd largest film studios by box office revenue in the United States. 2019 and 2018, the final years of film screenings, may not be the start.

A more reasonable combination is WarnerMedia-Discovery and ViacomCBS

Shari Redstone’s company has a broadcast network — CBS WarnerMedia-Discovery. not so considered appropriate (The merger of CBS and NBC under one roof would be one of the major obstacles to a merger. ViacomCBS-NBCUniversal)

Unlike NBCUniversal, ViacomCBS doesn’t have a large cable news network. That makes keeping CNN more feasible.

While ViacomCBS also owns a movie studio, Paramount has had a smaller box office than Universal in recent years. Among movie studios worldwide, Paramount ranked sixth in box office revenue in both 2018 and 2019. Combining Paramount and Warner Bros. would make sales easier for anti-corruption concerns. monopoly

The biggest complication would be if Redstone was willing to give up or dilute her controlled ViacomCBS share. That’s what Malone did to push Discovery and WarnerMedia together, so now there’s a template.

Disney and AMC Networks

This is the hardest selling. Disney doesn’t really need AMC Networks. Well done with the content.

But with Hulu licenses owned by Disney for a lot of content. It runs the risk of losing some hit shows. MGM, for example, made “The Handmaid’s Tale.” Now that Amazon has acquired MGM, it’s unclear whether the series will remain on Hulu once the deal closes.

The owners of “The Walking Dead”, IFC Films, and Sundance Now can support adult content for Hulu. That strikes a balance between a strong kids’ offering on Disney+ and sports on ESPN+. AMC estimates that it will have at least 9 streaming subscribers. Millions by the end of 2021 and 25 million by the end of 2025 are far from Hulu’s current 41.6 million or Disney+’s 103.6 million, but it’s evidence that there are at least some viewers. programming

And while cable TV is slowly dying, it’s not dead by about 85 million US households. Still subscribed to some bundled linear TVs.

Disney’s ESPN remains the lifeblood of the traditional pay-TV group. AMC Networks’ cable network integration with ESPN protects partner fees. This is because pay TV providers often don’t like to cancel ESPN.

The Dolan family controls AMC Networks. Dolans should have known for years that AMC Networks was sub-scale and should be integrated into the larger media fish if Dolans didn’t want to sell. They just won’t sell, but AMC Networks is pretty small at $2.2 billion in market valuation and about $4 billion in enterprise valuation. Disney can easily buy companies with cash.

However, Disney’s previous acquisitions, Pixar, Marvel, Lucas Films, are intellectual property. Does AMC Networks own the IP worthy enough to make a deal worthwhile for shareholders? And is the IP family-friendly enough to align with the company’s theme park business?

That might be why the Disney-AMC deal hasn’t happened yet.

Disclosure: NBCUniversal is the parent company of CNBC.

Watch: Amazon’s MGM Acquisition Will Add Value for Prime Users: Mark Mahaney

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