Matthew Garrahan

Rupert Murdoch’s 21st Century Fox has agreed to new terms to acquire Sky, the pan-European TV group, in a deal worth £24.5 billion that is designed to see off a rival offer from US media giant Comcast.

On both sides of the Atlantic, interest in news is high. The daily dramas of the Trump administration and the rollercoaster of the Brexit negotiations have fuelled sales of online subscriptions to US and UK newspapers grappling with the transition from print to a predominantly digital business model. The picture is bleaker for local newspapers. In the US there has been a hollowing out of a once-mighty sector.

The UK's Competition and Markets Authority decided that Rupert Murdoch’s £11.7 billion bid to take full control of Sky would concentrate too much power in the media mogul’s hands, giving the Murdoch family “too much control over news providers across all media platforms, and therefore too much influence over public opinion and the political agenda”.  Walt Disney will have to decide whether to take full control of Sky when it completes its proposed $66 billion takeover of the entertainment assets owned by Murdoch’s 21st Century Fox group.

Google and Facebook are set to attract 84 percent of global spending on digital advertising, excluding China, in 2017, according to a forecast from GroupM, the WPP-owned media buying agency, underscoring concerns that the two technology companies have become a digital duopoly. The research predicts that total global ad spending will increase by about $23 billion, or 4.3 percent, in 2018.

Donald Trump’s daughter Ivanka was a trustee for a large bloc of shares in 21st Century Fox and News Corp that belong to Rupert Murdoch’s two youngest daughters, underscoring the close ties between the US president’s family and the mogul behind the Fox News Channel.

The president’s daughter was a trustee of Grace and Chloe Murdoch, Murdoch’s children by his ex-wife Wendi Deng, during the campaign. The two girls, aged 15 and 13, hold shares worth close to a combined $300 million in the two companies, which are controlled by Murdoch and his family. Ivanka Trump said that she stepped down from the board on December 28.

[Commentary] If the future of entertainment is going to be about selling content to consumers directly, then the strongest players will be the ones with the most customer data. The combined AT&T-Time Warner will have a trove of it. If AT&T-Time Warner is approved, more deals should follow.

• Comcast, the world’s largest cable operator, already has an impressive content portfolio through its ownership of NBCUniversal, but it lacks wireless capability. It could buy an operator such as T-Mobile or Sprint.
• Verizon, meanwhile, has wireless and broadband but lacks a sizeable content production business, other than the recent digital acquisitions of AOL and Yahoo. It has the capacity to strike more deals.
• Charter Communications, which acquired Time Warner Cable, is America’s second largest player in cable but also lacks wireless capability. John Malone will not want any of his most-prized investments to be left behind.
• Then there is Rupert Murdoch and his sons, James and Lachlan, at 21st Century Fox. They were rejected when they tried to buy Time Warner two years ago. They also have the kind of entertainment assets that a mobile or wireless operator would covet, including cable channels, a film studio and a broadcast studio. But hell is likely to freeze over before the Murdochs sell, so they may opt to bulk up instead. The most likely outcome for them in the world of a combined AT&T-Time Warner would be a renewed bid for the rest of Sky, the European pay-television operator. Fox already owns a 39 percent stake.
• Disney owns arguably the world’s pre-eminent collection of content assets, including ESPN, Marvel, Pixar and Lucasfilm, but subscriber growth at ESPN, the main driver of Disney’s profits, is slowing. This has led to speculation that Disney may look for a meaty acquisition that gives it the ability to distribute its content direct to consumers at scale.

If US regulators impose conditions on an eventual approval of the proposed AT&T-Time Warner tie-up, they are likely to start with the more than 150 provisions they required for a similar transaction five years ago.

In its most significant orders, the US Department of Justice in January 2011 forced a merger between Comcast and NBCUniversal to license programming to other distributors, refrain from retaliating against content providers who supply rival cable companies and give equal treatment to competing online products on its internet network. The head of DoJ’s antitrust division at the time applauded the compromise. “The conditions imposed will maintain an open and fair marketplace while at the same time allow the innovative aspects of the transaction to go forward,” says Christine Varney, now head of the antitrust practice at Cravath, Swaine & Moore, which is representing Time Warner in the AT&T deal. But technology, markets and politics have all changed since 2011, potentially complicating the AT&T-Time Warner union, according to antitrust specialists in Washington.

Steve Case took to Twitter when he heard about AT&T’s proposed $85.4 billion takeover of Time Warner, coining a new hashtag: #DejaVu. The former chief executive of AOL knows a few things about buying Time Warner, having led the $164 billion purchase of the media company in 2000 in a deal widely regarded as the worst ever, given that it was swiftly followed by a $100 billion writedown. There is little chance of history repeating itself, despite Case’s wry tweet.

Randall Stephenson, AT&T’s chairman and chief executive, did not go into details about how he planned to turbo-charge Time Warner’s film and television programming but he made clear that it would help the company sell new products and services. “When we combine Time Warner content with our scale and distribution … we’re going to have something really special,” he said. It is unclear what that combination will look like. Stephenson said AT&T would be able to innovate more rapidly by owning its own content yet the company will still need to strike other licensing deals if the direct to consumer mobile and digital offerings it is planning are to be comprehensive. For example, an AT&T that owns Time Warner can offer classic cartoons from the Cartoon Network but none from Walt Disney. It can offer cable news from CNN but would need a separate licensing deal to also offer Fox News, which is owned by Rupert Murdoch’s 21st Century Fox. It can boast superheroes from DC Entertainment but will need an additional deal if it is to offer Iron Man, Captain America and The Avengers, which are owned by Disney’s Marvel Studios. The point is that vertical integration can only do so much.

AT&T has promised to use its proposed $85.4 billion purchase of Time Warner to revolutionise mobile entertainment as it unveiled a deal that will unite companies instrumental in the creation of the communications industry, provided it is approved by regulators. The cash and stock deal, worth $107.50 a share, brings together the telephony pioneer started by Alexander Graham Bell with an entertainment group that has its roots in the early days of Hollywood. The acquisition faces at least a year of scrutiny from US competition regulators and possible objections from rival content groups fearful of the combined entity’s market power.

Randall Stephenson, AT&T’s chief executive expressed confidence that regulators would approve the acquisition, saying there was no overlap between the two businesses. “This is not a horizontal deal. This is vertical merger. You would be hardpressed to find examples where vertical mergers have been blocked.” Time Warner has agreed to pay a $1.7 billion break-fee to AT&T if it opts to sell to another buyer while AT&T will pay Time Warner $500 million if regulators block the deal, apparently.

After a record summer in 2013, box-office receipts for the 2014 peak moviegoing season have fallen by more than 15 percent. If it were any time other than summer, this would not be cause for alarm.

But the period defined in Hollywood as the 18 weeks between the first Friday in May and Labor Day (the first Monday in September) is when the studios typically make 40 percent of their annual revenues.