Big players may move slowly, but these slow moves and mergers will create big waves.
2018 was a year of media consolidation. In broadcast it could be argued that this was in part a response to the rising growth of the over the top (OTT) new kids on the block. If it’s true that size matters, then the existing players look to be making strategic alliances in readiness for the fight.
Netflix has already muscled in and established itself as the entertainment TV portal in the UK OTT marketplace. If DAZN realise their ambitions to be the similar destination for sports, the likes of Sky, Disney and Turner may have to innovate to stay ahead.
Comcast, the largest cable TV provider in the States, acquired Sky for $39 billion. This gives them a significant European footprint and made them the biggest private sector provider of pay TV, with 52 million customers (Knowledge Wharton). Content, data, subscriptions and global expansion are reasons behind the acquisition. Content between these two will be leveraged globally, and it will be interesting to see what happens between Comcast’s 30% stake in Hulu and Sky’s NowTV – or will they develop a global online video service to combat Netflix?
Disney, for one, will be launching a competing online streaming platform, Disney+, later in 2019. Following its previous purchase of 21st Century Fox, Disney removed all content from Netflix in preparation for launch. TV’s new global giants will compete in content to retain customers.
Ad-free subscriptions are a popular business model for entertainment, offering a wide variety of quality content, readily available on smart platforms.
However, ad-funded business models must focus on scale to attract more advertising spend when competing against Facebook and Google. It does seem that size and scale matters, so we are seeing non-TV media owners consolidate too.
Trinity Mirror merged with Northern Shell to form Reach. Now the third largest newspaper group with 21.1% share of print circulations (Statista.com), Reach is a more effective challenger to NewsUK and DMG Media. As the name suggests, the merger offers greater scale to advertisers, but also a greater robust revenue mix across print and digital on top of the efficiencies from reducing duplication within the business.
Global (owners of national radio brands such as Capital, Heart and LBC) made a surprise move by acquiring not one, not two, but three outdoor media companies. In 2019 they will become the 2nd largest outdoor sales house in the UK – just behind JCDecaux. This creates a huge cross-media selling opportunity for Global, agencies and advertisers alike.
Both these give the opportunity to be more effectively ‘local’ at scale in two key broadcast channels. If coordinated through one sales point then the interplay between out of home and radio can be managed far more effectively. Or at least that is the theory.
Doubtless we’ll find out as the mergers reach maturity in 2019.