Wednesday, August 15, 2012

Is More Cable Network Consolidation In Our Future

We've watched as cable operators have merged and the landscape is dominated by a few distributors.  The list of departed cable operators is long including American Cable, Continental, Knology, Insight, and many others.  Today the top 5 operators dominate the country, With Comcast and Time Warner Cable accounting for most of the country. 

Consolidation is happening on the other side of the aisle too, in the content landscape.  Independent cable networks are few and far between as networks have been bought up into bigger media groups.  The latest rumor is that Scripps Networks Interactive, home for HGTV and Food Network, could be on the trading block with Disney the likely buyer.  "Already, Disney is in the process of proving that in contrast to media peers like News Corp, Viacom and Time Warner, it benefits from being a media conglomerate with a pool of assets that includes broadcast and cable networks, movie studios, theme parks and resorts."

It is the economic order as big fish continually buy up the little fish.  Certainly deeper pockets can help a smaller network to grow more rapidly.  It comes with hardship too as  network identities often have to broaden more and more to capture larger audience share.  Disney has done well so far, according to the report.  "In a media industry filled with bad mergers, broken synergy promises and assets that perform better independently, Disney is judged as having succeeded in its acquisitions of Marvel and Pixar, giving investors reason to believe that they have uncovered a rare winning conglomerate formula"  And companies that can successfully find synergies across their businesses are able to better exceed their goals.