Media conglomerates in the past, panel says

MEDIA CONGLOMERATES IN THE PAST, PANEL SAYS
[SOURCE: Hollywood Reporter 6/27, AUTHOR: Georg Szalai]
Is the heyday of media and entertainment conglomerates behind us? A panel of industry analysts and bankers discussed this and other deal making questions as part of a PricewaterhouseCoopers event here Tuesday, with several of them arguing that conglomeratization has no real benefits, especially in the digital age. "Consolidation in the old media world destroys value," said Laura Martin, founder and CEO of Media Metrics. "They are buying stuff (and audiences) because they don't know what else to do." She argued that online and digital deals with a monetization rather than a traffic focus are key, citing Google as a firm that has made smart acquisition decisions, while signaling that media giants are often otherwise inclined. Former Morgan Stanley entertainment and media analyst Richard Bilotti said that consolidation can at times create scale advantages, such as when News Corp. expanded its TV station group in recent years to reach duopolies and what he called "superb margins." But he argued that the Walt Disney Co.'s acquisition of Pixar -- while strategically positive -- may have taken a form that didn't benefit Disney shareholders much. Bilotti argued the price paid was fairly high for the CG-animation studio. "CG looks like it is in the seventh inning," he said on a bearish note, suggesting Disney could have instead sold Pixar its own studio operation and then taken a stake in it. Gamco Investors portfolio manager Lawrence Haverty said the Internet and cable and satellite TV spaces are all sectors where consolidation makes sense due to "natural economies of scale." PwC is predicting continued merger, acquisition and alliance activity in the media and entertainment space.
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