On this picture illustration the HBO Max and Discovery Communications brand seen displayed on a smartphone.
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Shopping for Lionsgate would assist Comcast’s NBCUniversal on two completely different fronts. First, it will add extra content material to Peacock, NBCUniversal’s subscription video service. Lionsgate owns exhibits together with “Mad Males,” “Orange is the New Black,” “Nashville” and “Zoey’s Extraordinary Playlist.” Lionsgate presently licenses these exhibits to a seize bag of streaming companies.
Second, Lionsgate owns premium community Starz, which might match seamlessly with NBCUniversal’s choices. NBCUniversal would not have a premium community, in contrast to rivals WarnerMedia (HBO) and ViacomCBS (Showtime).
On the streaming entrance, a Starz-Peacock mixture — both collectively as one service or individually as a bundled providing — may broaden NBCUniversal’s international aspirations. Starz is on monitor to have 60 million international subscribers by 2025, Chief Government John Feltheimer mentioned this week. Starz is already obtainable in 58 completely different international locations, which might give Peacock a head begin in its enlargement aspirations.
And Lionsgate would not value a lot, with a market capitalization of simply $3.8 billion (an an enterprise worth of about $6.4 billion). If Comcast goes to maintain NBCUniversal — bucking AT&T’s choice to surrender on vertical integration — shopping for Lionsgate could be a smart transfer to remain aggressive within the streaming wars with out breaking the financial institution.
There’s already hypothesis a couple of potential future merger between the newly created WarnerMedia-Discovery entity (assuming the deal closes) and NBCUniversal. Discovery’s controlling shareholder John Malone mentioned on CNBC how the mixed firm may very well be open to a future merger with NBCUniversal if regulatory forces would enable it.
However the divestments which may must happen may very well be too sophisticated and tax-inefficient for that mixture to happen. Regulators may not enable CNN and MSNBC to be housed beneath one company roof. Combining Comcast’s Common and WarnerMedia’s Warner Bros. — the No. 2 and No. 3 largest movie studios by field workplace income in 2019 and 2018, the final full years of theatrical releases — may be a non-starter.
The extra logical mixture could be WarnerMedia-Discovery and ViacomCBS.
Shari Redstone’s firm has a broadcast community — CBS. WarnerMedia-Discovery would not, in order that’s a match. (The mixture of CBS and NBC beneath one roof could be one main roadblock to a ViacomCBS-NBCUniversal merger.)
Not like NBCUniversal, ViacomCBS would not have a big cable information community. That makes preserving CNN extra viable.
Whereas ViacomCBS additionally owns a film studio, Paramount has been a a lot smaller field workplace presence than Common lately. Amongst international movie studios, Paramount was sixth in field workplace income in each 2018 and 2019. Placing collectively Paramount and Warner Bros. could be a neater promote for antitrust issues.
The most important complication could be if Redstone is prepared to surrender or dilute her controlling ViacomCBS shares. That is what Malone did to push Discovery and WarnerMedia collectively, so there’s now a template.
However with Disney-owned Hulu licensing a lot of its content material, it is susceptible to shedding a few of its hit exhibits. MGM, for instance, makes “The Handmaid’s Story.” Now that Amazon has acquired MGM, it is unclear if the sequence will stay on Hulu as soon as that deal closes.
The proprietor of “The Strolling Useless,” IFC Movies, and Sundance Now may present an adult-themed content material enhance to Hulu. That might steadiness out the sturdy youngsters’ providing on Disney+ and sports activities on ESPN+. AMC has forecast it’ll have not less than 9 million streaming subscribers by the tip of 2021 and 25 million by the tip of 2025. That is a far cry from Hulu’s present 41.6 million or Disney+’s 103.6 million, however it’s proof that there is not less than some viewers for the programming.
And whereas cable is slowly dying, it isn’t useless but, with about 85 million U.S. households nonetheless subscribing to some type of bundled linear TV.
Disney’s ESPN stays the lifeblood of the standard pay-TV bundle. Bundling AMC Networks’ cable networks with ESPN would defend affiliate charges, as pay-TV suppliers have at all times been detest to drop ESPN.
The Dolan Household controls AMC Networks. The Dolans have probably identified for years that AMC Networks is subscale and may mix with a much bigger media fish. If the Dolans do not wish to promote, they will not. However AMC Networks is comparatively tiny at $2.2 billion in market valuation and about $4 billion in enterprise worth. Disney may simply purchase the corporate in money.
Nevertheless, Disney’s earlier acquisitions — Pixar, Marvel, Lucas Movies — have been for mental property. Does AMC Networks personal sufficient invaluable IP to make a deal price it for shareholders? And is that IP family-friendly sufficient to mesh with the corporate’s theme park enterprise?
Which may be why a Disney-AMC deal hasn’t already occurred.
Disclosure: NBCUniversal is the mother or father firm of CNBC.