Letter From New York 05 26 15 Of mergers and mania, notes from the media world…

The sun has darted in and out behind clouds all day. I woke up fairly early but had decided not to take my regular train into the city but the one after that; after a long Memorial Day weekend, much spent on the deck watching the creek flow by, I got up, had my morning cup of coffee and started perusing the news.

Pushing to the head of the news today was that Charter Communications will acquire Time-Warner Cable in a deal that is worth about 78 billion dollars, only a few weeks after Comcast withdrew its bid for Time Warner Cable because it looked like it would not receive regulatory approval.

This time the chances are better. Why? It’s not Comcast that is doing the acquiring but Charter. Comcast also holds lots of other assets besides its cable assets, including a small company called NBC Universal.

In the interesting and byzantine world of cable, Charter’s largest shareholder is Liberty Media, a company controlled by John Malone, a cable pioneer who built the nation’s largest cable company, TCI, and sold it to Bell Atlantic back in 1994 for $55 billion.

John Malone’s TCI financially backed and gave carriage to a number of struggling cable networks, including Discovery which has gone on to being its own small behemoth.

In those days, he earned the sobriquets of “Darth Vader” and the “King of Cable.” He dominated the cable business from his office in Denver. Liberty Media is a conglomerate with interests in lots of companies here and abroad. John Malone is personally worth about $8.6 billion and is the largest landowner in America.

The combined companies will be the number two cable and broadband supplier in the country, after Comcast. But the fact that it will only be number two and won’t control about 50% of broadband connections is what will make it easier for regulators to say yes to this while having said no to Comcast.

In the days when cable customers are beginning to shift their loyalty to streaming services such as Netflix, cable operators are seeking partners to bulk up to face the challenge.

Recently, European operator Altice purchased Suddenlink, a smaller cable company. It will be interesting to see who is where when the music stops.

The music stopped for ITV’s purchase of The Weinstein’s TV division. Too caught up in the movie business of the Weinstein brothers and ITV has no appetite for the film business.

This story is days old but keeps repeating. Media bosses make good paychecks, especially if you work with a company that has John Malone on the board. Several of the companies that Liberty is invested in have CEO’s who have rich compensation packages.

David Zaslav of Discovery Communications, in which Liberty has an interest, is the highest paid exec of a publicly traded company. He earned something like $156,000,000 last year, after extending his contract.

Breathtaking.

As we move into the negotiations for advertising next year, in what is called “the upfront” there are a couple of trends to be noted. One is that traditional TV dollars are down while digital is growing strongly, 21%.

Big brands are having a tough time in packaged goods. Consumers are beginning to gravitate to smaller brands that feel more “authentic” than say P&G or Clorox. It’s going to be a tough fight out there over the next few years for the hearts and minds of consumers, particularly in latching on to young consumers who are consuming media in such different ways.

Kellogg is pulling advertising from YouTube until they get better numbers, a blow for the service. They want someone like a Nielsen to come in and verify the numbers. The trend is growing and Kraft Foods is saying its probably going to follow suit with some platforms.

Branded entertainment is growing but is still a fraction of traditional advertising. It’s still hard to get some buyers to buy.

Cowen and Company, a research company, is predicting that by 2020 Netflix will have one hundred million subscribers and about 17 billion dollars in revenue, domestically and internationally.

They have just acquired all the 1990’s episodes of “Bill Nye The Science Guy.” Go Netflix.

Being a Netflix fan I will probably go home after a bite or two at a favorite place and watch something off the service.

Have a good evening everyone!

Tags: , , , , , , , , , , , , , , , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s


%d bloggers like this: