Tech-Media Mergers’ Flimsy Script
[Commentary] Big Tech and Big Media may partner to shape the future of TV. But that doesn’t necessarily mean they’re getting together completely. The view that cable industry consolidation, advertising pressures and declining pay TV subscriber numbers will push major US media firms to merge has been a topic of conversation since Comcast first announced plans to buy Time Warner Cable in early 2014. But for at least as long, media bankers, investors and even the media firms have talked up another merger idea: namely, that technology giants such as Apple, Google, Facebook, Netflix or Amazon.com will acquire media companies.
The tech industry has long aimed to muscle in on pay TV and its advertising dollars. Netflix and Amazon already have streaming services, helping to undermine TV ratings and fuel cord-cutting. Yet all prospective TV entrants face tough gatekeepers in the form of major media firms whose content is seen as essential to the success of Web-based TV. Still, that doesn’t mean Big Tech will simply go shopping for companies. For one, tying the knot with a single media firm might hinder negotiations with others. A deal might hedge the costs of buying content. But for most tech companies where TV isn’t the core business, those costs are less material anyway versus what they represent for a cable company like Comcast, which owns NBCUniversal. And any tech-sector acquirer would be paying a premium for a business model tied directly to the very TV ecosystem the buyer seeks to disrupt. Netflix, one of the biggest video innovators, has never bought another firm.