New Media May Buy Old Media – For Surprising Reasons

Is Netflix buying Viacom? Amazon buying CBS?  New media companies buying old ones makes sense. But maybe not for reasons you think.

Mario Gabelli, chairman-CEO, Gabelli Asset Management — a famous investor in media companies, as well as other companies — mused about Netflix buying Viacom on CNBC recently. He didn’t go into details.

But let’s ruminate here a bit: Could Netflix wants to own a big-time studio — Paramount Pictures — which would aid its ever-building approach to expanding TV and movie content development?

Others have speculated about a Amazon and CBS combination. The logic here would allow CBS to more effectively compete with other networks by having the wherewithal in higher bids for sports rights.

CBS recently lost out on renewing “Thursday Night Football.” In 2010, it struck a partnership deal with Turner Sports to co-air the NCAA Men’s college basketball tournament event in March, after a decade of airing it exclusively.

We didn’t talk about the obvious: With CBS, Amazon would be getting into network TV business; with Viacom, Netflix would be getting traditional ad-supported cable TV networks. Perhaps those older TV businesses might not remain intact in future years. They may be sold for parts.

But this would be a different tact from Walt Disney’s $71.3 billion deal for half of 21st Century Fox’s TV and movie business. That is old-style traditional TV and movie consolidation.

Apart from this, traditional media business combinations/practices aren’t good enough for the future, which might include big TV station groups buying more TV stations.

For big media companies, amassing traditional TV networks had been a leverage to extract the highest license fees from pay TV providers — not just for well-viewed networks, but especially for those poor performing networks.

No longer. No one is going to pay for lower-favored consumers’ programming, not when there is a ton of TV programming content available on different platforms — traditional TV networks, digital on-demand video platform services, over-the-air digital TV content, and still rising short-form TV/video content.

For big powerful new digital media companies like Amazon and Netflix? Purchasing old media won’t mean an old screen view.

by Wayne Friedman
Courtesy of mediapost