Mega media mergers, like the one reported on Wednesday involving Rupert Murdoch-controlled 21st Century Fox’s bid to buy Time Warner, seem a world away from Silicon Valley.
But it’s likely that the tech industry sat up and took notice of Murdoch’s failed $80 billion bid. As the New York Times reported, the effort might signal that Time Warner is in play and herald a new era of mega media mergers.
So who in tech might care and why?
Companies like Google, Facebook, Yahoo, Netflix and Amazon are all in the media business, somewhat. In fact, Variety reported last week that along with 21st Century Fox, Google was a reported suitor of Time Warner. Jeff Bewkes, the CEO of Time Warner, told Variety that it was news to him that Google was interested.
If Murdoch’s bid touches off media merger mania, is it a shopping opportunity for tech? Or will the industry fear that a consolidated industry means higher licensing costs?
I spoke to two industry analysts for their take. Here are their edited responses.
Paul Verna, a senior analyst at eMarketer, said a company like Netflix might be worried that a merger could give a combined firm more leverage over licensing pricing. But tech has been creating and investing in their own content too:
That’s a way to hedge on depending on the film libraries of the media companies. Netflix has gone the furthest but also Google, Yahoo and Amazon. The film libraries of 21st Century Fox and Time Warner don’t matter like they did.
I don’t think it would make sense for a tech company to go into a TV business. They already have so much they are trying to do. But the waters are mingling, what is a traditional broadcaster, what is a tech company or a media company?
James McQuivey, principal analyst, Forrester, said that for tech companies, content is simply bait to drive consumers to other goods and services. But it may make sense for Google or another firm to buy a large content company someday:
Media companies are trying to draw an audience but they only have a limited number of ways to monetize that audience. Revenue per audience member is going down. But if you are a tech company, you use media to draw them in, to buy a phone, etc. There’s an uneven war going on between media companies and tech firms.
It would make a lot of sense for Google to buy a media company and put that content on YouTube, maybe with a paywall. Apple could buy Disney and it would have a very profitable property that owns ESPN.
The challenge with Yahoo is that they are buying a lot of content but they don’t have anything to bait the audience into. At some point Yahoo and AOL both become just another media property that someone bigger would buy as sort of a baiting mechanism. Samsung could buy Yahoo, put Yahoo’s content on its PCs and smart TV.
Above: Rupert Murdoch (Associated Press)