Shift in Media Consolidation: Changing Synergies?

  • Telecos have found it difficult to get payoffs from the media business. Several high growth media businesses including streaming platforms / OTT platforms are evolving from being content aggregators to content creators. The “cash burning” in the process of becoming a superior content creator and distributor has been enervating the combined margins of the media-telecom conglomerates. Despite profitable core telecom operations, the combined entities started to report decreased margins
  • There has been a higher synergy in content collaboration than compared to service collaboration. For eg: Disney’s acquisition of 24th Century Fox gave an opportunity to introduce X-men (owned by 24th Century Fox) in the Marvel Cinematic Universe (owned by Disney). They recently introduced the character Deadpool in the Marvel Cinematic Universe, and this has caused a lot of excitement in their fans. Huge box office collections of the independent movies in X-men and MCU give us an idea of how tremendous potential the collaborated content has. Several giant conglomerates in the sector are identifying content synergies and are collaborating their media assets into a distinct pure play media entities. AT&T’s decision to merge Warner Media with Discovery network shows their acknowledgement to this trend
  • There has also been a multi-billion investment announcement by President Biden for development of advanced telecom infra. This includes significant fund deployment for development of broadband infrastructure to underserved areas. A whooping $180 billion has also been sanctioned for funding research on future telecom technologies. This investment announcement also triggered a paradigm shift in focus of the incumbent telecos towards their core businesses. Enhanced focus on the core operations can help these telecos encash the upcoming 5G revolution which might further bring great changes in the way industry is currently functioning.




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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points.

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