Anthony Palazzo
CONSOLIDATION in entertainment, media and communications this year will be driven by consumers’ thirst for instant access to programming and bandwidth to support it, according to PwC.
Consumer demand has set off a race among media companies to obtain more content, and among distributors to expand pipelines to deliver programmes anywhere, anytime, the US-based consulting firm said in a report yesterday.
International broadcasters were also investing in US-based production firms to fulfil demand, it said.
Licences for US radio waves are scarce and becoming more expensive, as the Federal Communications Commission runs low on new frequencies it can offer, helping to trigger a bidding war for cellular firm Sprint, according to the report. Consumer demand for ubiquitous viewing is also prompting acquisitions of content creators.
Netflix’s estimated $100 million (R930m) investment in House of Cards, the original programme shown exclusively on its $7.99-a-month online service, was cited as an example of new demand for shows. Walt Disney spent about $4 billion on Lucasfilm, underscoring the value of content creators.
Sprint is the subject of competing takeover bids from Dish Network and Softbank in Tokyo. Dish chairman Charlie Ergen is looking to turn his satellite-TV provider into a wireless juggernaut. Softbank’s Masayoshi Son seeks to create a cross-border competitor to Verizon Wireless and AT&T.
Dish offered $25.5bn for Sprint last week, topping a $20.1bn partial bid by Softbank in October last year. Virgin Media, the provider of pay-TV services in London, is being acquired by John Malone’s Liberty Global for $18.3bn.
As they bulked up, media and communications companies were getting rid of their less attractive businesses, PwC said, citing Time Warner and Tribune.
Tribune, the company that emerged from bankruptcy last year, said in February that it had hired JPMorgan Chase and Evercore Partners as financial advisers after receiving interest in its newspapers.
Time Warner said in March that it would spin off its Time magazine operation.
The Standard & Poor’s 500 media index, which includes Disney, Time Warner, News Corporation and other large content companies, has advanced 17 percent this year, and 42 percent in the past 12 months, Bloomberg data show.
As new technologies challenge media businesses, big players such as Apple and Google will also keep investing in entertainment, media and communications, according to the report. – Bloomberg