Recent years have been especially eventful for the entertainment industry. Aside from record-breaking box office hits and the release of new streaming platforms, several companies have completed major mergers and acquisitions (M&As) in a bid for market dominance.
While not all of these M&As turned out well, the ones that can pull them off successfully created great value.
Here are the three most important M&As in recent years that are reshaping the entertainment industry.
Disney’s Acquisition of 21st Century Fox
In a landmark deal that took place earlier this year, Disney acquired 21st Century Fox for a whopping 71.3 billion USD after a bidding war with Comcast.
Key assets included in the acquisition were the 20th Century Fox Film Corporation, 20th Century Fox Television, and the Fox Networks Group. Those not acquired by Disney were either spun-off under the newly formed Fox Corporation (such as the Fox Broadcasting Company and the Fox News Media Group) or sold off to third parties (like the Sinclair Broadcast Group acquiring Fox Sports Networks).
The acquisition is yet another notch in the belt of Disney CEO Bob Iger. Under his leadership, Disney was able to acquire Pixar, Marvel, Lucasfilm, and now 21st Century Fox which cemented the Walt Disney Company as a behemoth of the entertainment industry.
With several IPs now at their disposal; such as the Marvel Universe’s X-Men and Fantastic Four, Disney’s expanded portfolio further strengthens its position as a leader in both the domestic and global box office. While Disney is now estimated to control a massive 40% of the movie market following the Fox acquisition, the poor reception of Dark Phoenix, the first release following the deal, has started to cast doubts as to whether this was the right move.
Aside from movies, the Disney-Fox deal is creating ripples in the world of on-demand streaming. Now the majority owner of Hulu, Disney aims to invest more in the service’s content creation and international expansion. Fox’s video libraries (one of the most notable being The Simpsons) are a welcome addition to the recently launched Disney+, the company’s own streaming platform, putting Disney in a much better position to compete with Netflix.
Comcast’s Takeover of Sky plc
Instead of securing 21st Century Fox, Comcast turned their attention to UK-based media and telecommunications company Sky plc, which they acquired for 39 billion USD after a three-round auction process. Over the next few weeks, Comcast consolidated its ownership through purchasing the remaining shares from Fox and other shareholders, leading to Sky plc being delisted by November 2018.
The acquisition would play a key role in augmenting Comcast’s video advertising services. With plans to combine NBCUniversal’s Audience Studio and Sky’s AdSmart into one platform, this provides several new tools for advertisers to use as well as critical expansion into European markets like the UK.
With Comcast’s NBCUniversal planning to release its own video streaming service in 2020, Sky’s content production (as well as its own streaming service, Now TV) would be advantageous to leverage in the face of stiff competition from Netflix and Amazon Prime Video.
AT&T’s Purchasing of Time Warner
In a massive 85.4 billion USD deal, AT&T acquired Time Warner (now called WarnerMedia following the purchase) in June of 2018, despite attempts by the US Justice Department to block the acquisition on antitrust grounds.
Essentially a “vertical merger”, the acquisition allows WarnerMedia’s media content (such as HBO, Cinemax, Warner Bros., and more) to benefit from AT&T’s distribution network. A statement made by Randall Stephenson, AT&T’s Chairman and CEO, shares the vision behind the move:
“The content and creative talent at Warner Bros., HBO and Turner are first-rate. Combine all that with AT&T’s strengths in direct-to-consumer distribution, and we offer customers a differentiated, high-quality, mobile-first entertainment experience… We’re going to bring a fresh approach to how the media and entertainment industry works for consumers, content creators, distributors, and advertisers.”
Following the acquisition, AT&T’s WarnerMedia is looking to enter the on-demand video streaming industry with the release of its own platform. With access to a combined video library from HBO, Cinemax, as well as Warner Bros. movies and television, the service aims for a monthly subscription between 16 to 17 USD, significantly higher than other platforms like Netflix and Disney+. As to whether the content selection and AT&T’s distribution will be enough for the platform to be competitive remains to be seen, as the service is tentatively set to debut within the next few months.
If anything, these three M&As have the potential to create a significant impact in the world of media, especially in the field of video streaming services. While it’s still too early to say how these will fare in the long run, it’s certain that they will shape the face of the entertainment industry for years to come.
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