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The November election was supposed to have ushered in a brave new world of media and entertainment M&A, but so far not so much. Yes, Comcast has announced its cable network spin-off, Disney and FuboTV are merging streaming services Hulu and FuboTV (more about settling litigation than a strategic imperative), and Skydance is still trying to complete its Paramount deal. But it turns out that jarring tariffs, uncertain tax changes, and antsy consumers have all placed if not a freeze than a definite cooling on groundbreaking dealmaking. So, what’s a media CEO with a need for speed – in transforming their business if not in space travel – to do?
Strategy consultants – present company included – are always looking at some variation of enhancing the “people, process and technology” infrastructure for their clients. Under that all-encompassing rubric, if there isn’t a short-term megadeal to solve all problems, there are a still some significant areas of action we can and should expect to see come to the forefront in the months ahead.
AI, AI, AI (or eye, eye, eye, depending on your perspective)
AI isn’t just for “experts” anymore. For anyone leading a business in the throes of secular change, leveraging AI across your organization is an imperative. Of course, AI investment is sucking up massive capital throughout the Big Tech world. But it’s no less critical for media companies facing crushing needs to maximize productivity across every stage of the media supply chain, from content development to production to marketing to sales to distribution.
This week’s announcement by Group M’s CEO Brian Lesser was particularly instructive. While two of Lesser’s biggest competitors, Omnicom Media Group and Interpublic Group, have announced a plan to merge, Group M’s owner WPP at least for now must operate its way out of its challenges. Lesser acknowledged that no matter how much first-party data they may accumulate, the only way to truly serve their global clients effectively is to exploit AI to help “connect data across publishers, partners, retailers, platforms and clients.” For media companies facing the forever fragmentation of audiences for their content, and the always-precarious nature of media mergers – get out a list of those – we might well expect to hear more of this approach to enhancing their own monetization strategies.
Accumulating content assets on an “a la carte” basis
Even if mega mergers are a bit out of reach right now, media companies might and should look to be opportunistic in exploring specific content assets for purchase or licensing. There are still plenty of content libraries and even individual properties that might make more sense elsewhere than under the sole control of their present owner. Post Comcast spinoff, might cable networks Syfy or E! make sense linked to other entities with specific interests in exploiting their content with existing superfans? Might there be international markets and production partners where library content could be exploited or adapted? I’d be overturning a ton of rocks right now and if need be – here it comes – look at how AI can uncover better information about untapped content and markets. You may not need or want the whole village – a couple of fixer-uppers can do wonders.
Technology collaboration
The broadcast business has been pining for years for regulatory changes to remove national and regional limits on station ownership. They may or may not get that any time soon – there seem to be several hundred or thousand other priorities right now in the federal government. But when I spoke this week before the North American Broadcasters Association, I was intrigued to hear more about a new technology-focused joint venture among a group of the largest broadcast station owners. Sinclair, E.W. Scripps Company, Gray Media, and Nexstar Media Group recently announced the formation of EdgeBeam Wireless, using “NextGen TV” broadcast spectrum technology to enhance wireless applications such as content streaming at home (could this have been useful to Hulu during the Oscars?) or inside of cars. This is a national platform that none of these independent companies could have delivered on their own. But together they at least hold the promise of an entirely new business, reaching over 97% of U.S. households. Joint ventures are never easy in the media world. But maybe necessity is the mother of collaboration here.
Focusing on quality not just the quantity of the experience
Post-Covid the market in travel and hospitality has been robust with consumers being willing to spend heavily for memorable “experiences.” Disney and Comcast’s NBC Universal are lucky to possess their theme parks which have seemed almost immune to the impact of inflation and economic uncertainty in recent years. A year ago, Disney announced it was investing $1.5 billion in Epic Games to create what the companies have called “an all-new games and entertainment experience.” In Orlando, Florida this spring, Comcast is opening its own “Universal Epic Universe” as its fourth theme park there. Other than the failure to produce a synonym for “epic” these are big bets on real-world experiences with expectations of significant organic growth for these companies.
Not every media company can own a theme park. But every one of them is in the streaming business and that is an area that desperately needs some investment in the user experience. Maybe instead of simply accumulating more product volume – which may be harder in the absence of mega mergers – we could see some investment to enhance content discovery and flow within and between apps that would boost consumer satisfaction and the precious metric of time (better) spent. I can dream, can’t I?
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