A report by media analyst Tony Wible of Janney Capital Markets suggests that a merger between media giants 21st Century Fox and Time Warner would make a lot of sense. Could Fox News and CNN one day be brothers? “However improbable it may seem, one cannot overlook this mega deal given its immense financial benefits that dovetail with a number of strategic benefits like the added sports rights, studio market share, TV production synergies, large content library, news programing synergies, distribution savings, and brand compatibility,” Wible wrote.
What’s good for the goose may be good for the gander when it comes to consolidation in the media biz: Given all the consolidation on the distribution side with Comcast acquiring Time Warner Cable (separate company from Time Warner) and AT&T buying DirecTV, the idea of two major programming suppliers looking to combine does make sense. Many programmers have expressed concern that if the number of distributors continues to shrink, they will be at a disadvantage when it comes to negotiating deals.
Time Warner has been shedding non-TV and movie assets for some time and later this year its magazine unit, Time Inc., will be spun off. That will probably have some wondering what the slimmed-down company’s next play will be and a deal with Fox could a potential exit strategy, noted the LA Times story.
Fox and Time Warner have powerful movie studios and Warner Bros. TV and 20th Century Fox Television are top producers of sitcoms and dramas. Time Warner owns TNT, TBS, TruTV while Fox has FX and new channels FXX and Fox Sports 1. Fox doesn’t have a premium channel; Time Warner has HBO. Time Warner has sports on its Turner channels, including professional baseball and basketball; Fox could use more sports for its Fox Sports 1 and Fox Sports 2 channels. Putting the Turner sports products on Fox Sports outlets could instantly make those networks a more viable competitor to ESPN.
Such a deal would certainly raise a lot of eyebrows but there are not a lot of regulatory hurdles currently on the books to be overcome. The FCC has no limits on how much content one company can make. Its rules focus more on distribution, and combining 21st Century Fox and Time Warner would not change the reach of Fox’s TV stations. DOJ, though, would also probably want a say in what such a combination would mean in terms of competition, noted the story.
Despite the lack of obvious regulatory roadblocks, media watchdogs would probably ferociously fight such a merger, contending that it would put too much power over content in one company’s hands.
Besides a 21st Century Fox-Time Warner combination, Wible suggests that CBS and Viacom might benefit from remarrying. The two companies merged in 2000 and then split apart in 2005. Sumner Redstone is chairman of both companies.
