1. Fox For Sale
Fresh on the heels of rumors that Disney was looking to buy Fox comes yesterday’s breaking news that Comcast, Sony and even Verizon were looking too. Because who wouldn’t want to own The Simpsons and The Americans, right?
Why It Matters
Actually it’s a lot more complicated than that. Let’s break it down into why Fox wants to sell and what they have to offer.
Why They Want To Sell: The most credible rumors revolve around Fox wanting to simplify their business so that they can become a nimble organization like CBS. Everyone wants to be CBS these days because (a) they are killing it in the Nielsen ratings and (b) they launched a successful OTT app in CBS All Access, and while Hulu is nothing to sneeze at, it is a distinct entity with its own leadership and owning a minority interest in said distinct entity (Fox, Comcast and Disney own 30% of Hulu, Time Warner owns the last 10%) is nowhere near as satisfying as owning 100% of a your very own OTT service.
Right now, Fox has to deal with trying to compete with Netflix and Amazon in terms of digital and with Sony, Universal, Disney at al on the movie front. That’s a lot of plates to keep in the air and they’re thinking that in a time of great disruption (or rapid evolution as we like to put it) that the ability to focus on just one thing is going to be to their advantage.
Why Everyone Else Wants To Buy Them: Other media companies have the opposite POV, they think that the more plates you have in the air, the more likely it is that one of them will still be spinning when and if everything else comes crashing down.
Verizon certainly seems to be of that mindset and most observers have given up trying to understanding the rationale behind their various purchases (e.g. AOL and Yahoo, OnCue) and so while they may have a well-thought out plan in mind, it’s becoming hard to tell.
Comcast is much more measured in their acquisition strategy and TV[R]EV’s assumption is that they’re looking at that extra 30% of Hulu, which would give them a controlling interest, and thinking that this could be their Netflix-slayer, given that they control distribution and all that. Factor in the fun Comcast will have when the restrictions around their purchase of NBCU expire mid-2018 and their plan to make the X1 (or X2) the ultimate set top box and you can see why this deal may be appealing to them.
Sony just wants to get deeper into television, which is why they might want to buy FX and Fox’s other cable properties, and buying Fox’s movie assets would help them out with TV and with their own movie business as well. On the TV side, Sony Pictures Television is considered to be a first class studio operation (it’s where Apple hired their new studio heads from) and if they owned a distribution platform, and some first rate content, they could conceivably make a go of it, building on FX’s reputation as a home for ad-supported Peak TV. This could be a smart move for Sony given that their lead in TV hardware has pretty much evaporated. (But a moment of silence for Trinitron. Who made TV sets that lasted a good 30 years.)
What Does TV[R]EV Think Will Happen? If we were that prescient, we’d be sitting at the $100K tables in Vegas, not writing this column. But if we had to bet, we’d say it probably won’t be Comcast or Verizon. Because the DOJ.
Regardless of the actual reason the DOJ is opposing the AT&T/Time Warner merger, they’ve doubled down on the notion of the dangers of letting an MVPD own a television network (or network of networks). As such, they’d have a hard time turning around and saying “well that only counts if the MVPD’s name starts with ‘A’ and if they also own a mobile phone business.”
But given the events of the past year, anything is possible, and it’s all double plus good, right? (See what we did there.)
The Apple Option: As noted previously, Apple has close to a trillion dollars on hand and no way to distribute the billion dollars worth of programming they’re about to produce. Buying up Fox’s cable channels, movie studios and maybe even their sports business could be a big win for Apple and a way to use their money to get into the TV game for realz. The problem of course is that no one at Apple has ever done anything like this and their culture is all about hardware, not TV shows.
That said, they’re the only tech company to make smart TV-related hires, bringing on the aforementioned Zach van Amsburg and Jamie Erlicht, who, unlike so many tech company TV hires, have actual solid TV experience. That may bode well for their ability to know what they don’t know and put the right people in charge.
What You Need To Do About It
Well, if you’re Apple, think about buying some of what Fox is selling. If you’re everyone else, just sit back and watch how this all plays out, bearing in mind that it might not play out: Fox may ultimately decide not to sell.
The FCC Allows Local Newspapers And TV Stations To Cohabit
Much to the consternation of many folks in the media business, the Ajit Pai-led FCC eliminated, by a vote of 3-2, a handful of 1970s era restrictions that prevented the same company from owning a daily newspaper and a TV station in the same market, prevented TV stations from merging with each other if that would leave less than eight independently owned stations in the market, and limited how many radio and TV stations a media company could own in the single market.
Why It Matters
On the one hand, much of the hue and cry stems from the fact that the company most likely to benefit from these changes is Sinclair, whose political leanings are way to the right of Fox News. Leaving Sinclair as the sole media voice in many markets is scary to people who don’t share their conservative point of view.
On the other hand, there’s the whole notion of local media. Which, to use Pai’s language on why these rules needed to be rescinded, is itself more than a bit stale.
Because as we noted last week, there’s no real reason for local broadcast television to exist. At least not in 2017. If you were designing television from scratch, local broadcast wouldn’t even be a consideration. But it exists and it’s got a lot of political clout, and so it’s not likely to go anywhere other than maybe bankrupt.
Which is why Sinclair’s been so successful. By putting all these local stations together, they’ve made operating them more economically feasible, as they can create economies of scale.
But pulling back for a minute and taking Sinclair and their politics out of the equation, the lines between TV and radio and print are getting very blurry. The New York Times Wall Street Journal and dozens of other newspapers are heavily invested in video, while many local TV stations maintain thriving websites. Given that reporting local news is all the local newspaper does, it would stand to reason they’d do a great job turning that local news into a half hour video program twice a day.
Local advertising is a multi-billion dollar business, but given the industry’s advanced data capabilities and ability to target consumers based on a variety of metrics, there’s no reason a national media outlet can’t effectively run a local ad business.
Other than tradition that is, and that’s never a good reason.
What You Need To Do About It
This is another one where there’s not much you can do beyond sit back and watch. Revamping local media makes sense from an intellectual perspective but too many people have too much invested in it financially, emotionally and politically for any sort of real change to take hold.