Year-End: Will Big Media Companies Hit Their Stride, Or Their Peak, In 2014?

[Commentary] People in and around the media business stock market may look at 2013 as the calm before the storm. Many execs say that the good times will keep rolling in 2014. Additional ad revenues will pour into the market for the Olympics and mid-term elections, and media companies are making headway in their efforts to adjust to social media and new technologies. But next year moguls may have to work harder than they have in years for their unconscionably high pay. They face a possible return of merger mania, new efforts by tech giants to divert advertising and subscription dollars, and skittish shareholders poised to sell at the first sign that company earnings can’t fulfill their outsized expectations.

• Will Netflix’ tap the brakes on its content spending spree? After a few years of license deals it owed creators of its streaming content $6.5B at the end of September, with 43% due in less than a year -- and it has vowed to commit nearly $3B in 2014 for TV shows and movies.
• Will merger mania reshape pay TV? In 2014, it should be relatively easy for buyers to raise cash. Interest rates are low, the stock market is near a record high, and the economy is at least stable. Meanwhile, pay TV distributors and content creators appear to be finished with deconsolidation (think Fox and newspapers, Time Warner and magazines, CBS and billboards). They crave economies of scale as the business matures, and increasingly looks like zero-sum game.
• Will someone launch a virtual cable system? Viacom CEO Philippe Dauman sounded like he was spilling a secret when he said that there’s a “very strong chance” someone in 2014 will sell subscriptions for a collection of pay TV channels transmitted via the Internet. It’s a tantalizing thought if -- and it’s a big “if” -- it indicates that one of the seven companies that control more than 80% of primetime TV viewing is ready to think outside the pay TV bundle.
• Will local TV become 2014’s hot medium? Tribune, Gannett, and Sinclair bet that it will when they committed billions this year to buy stations. The dealmaking could continue in 2014, especially if the FCC raises its ownership caps.
• What will Apple do? CEO Tim Cook said this year that the consumer electronics company will have “some really great stuff coming in the fall and across all of 2014.” He’d better. Competitors have made deep inroads into the smartphone and tablet markets that Apple created by selling slick products that run Google’s Android operating system.

[Dec 27]