AT&T bid for Time Warner looks set to trigger consolidation wave

[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.