Welcome to the blog of Dr. Lisa Burns' Media Studies senior capstone class (2 pm section) at Quinnipiac University. If you're looking for the latest on media industry trends and insightful media analysis, you've come to the right place!
Saturday, January 13, 2018
Media Consolidation & Multiple Platforms Blog 1, Question 1 (Jan. 30th)
Which major media conglomerate is best positioned to
succeed and which organization will face the most challenges in 2018? Limit:
12 responses
I am picking Disney as my best-positioned media conglomerate for 2018. Disney may have a demographic mostly consisting of children but they have never stopped adapting to an ever-changing environment. What’s recently had Disney in the media is their recent purchase of 21st Century Fox for $52.4 billion (Bond). When acquiring the majority of Fox they got Fox’s stake in Hulu. Hulu is probably considered Netflix’s biggest competition. Just like Netflix, Hulu has started producing original content, but Hulu only streams in the United States. Netflix streams in nearly every country. Now entering the game of SVOD is Disney. In 2019, all of their content will be pulled and will only be available for their own streaming service. This is only one example of Disney adapting to a new way of media consumption, which is why I doubt they could ever be in trouble; it seems as though Disney will own all media one day. Until that day comes, there are many other media companies in the game. There’s Time Warner, AT&T, NBC Universal, Viacom and Amazon to name a few. Apart from NBC Universal, no other conglomerate has theme parks around the world and no other conglomerate has a feeling of joy associated with their name.
Disney’s upcoming streaming service is allegedly the reason they pursued FOX, according to The Hollywood Reporter. I assume this is because Disney is perceived as children’s media. With princesses and cartoons, Disney doesn’t attract every demographic. By consuming the portion of FOX that owns FX and other film studios, Disney is dipping its toes into almost every demographic. Disney CEO, Bob Iger, has said “the company will, after the deal, have a chance to offer several streaming services focused on different audiences, with Hulu likely to be positioned as a more adult-oriented service, compared with a planned ESPN sports service and a planned Disney family service” (Jarvey).
While I do predict Disney will have an amazing 2018, I can’t say the same for all of the other media companies. A company that will face the most challenges is one that refuses to change in an adapting market. 2018 will be a year where cord-cutters continue switching to SVOD. “More and more people are ditching TVs and cable. The selling of these stocks is a true indication that traditional TV is in trouble” (Peters). As of 2015, even the top media companies began struggling with investors and cable viewers. Disney was included in the list in addition to CBS and Viacom. Companies traditionally known for television need to start introducing new things to their brand. Allowing more television shows and movies to be available on Netflix and Hulu means more money for these companies. In an SVOD-based culture, that just might be what these companies do to stay afloat. I don’t propose they all jump ship like Disney to a new streaming service, but I definitely stand by my opinion that these types of companies will be the ones to face hardship in the coming years.
Bond, Paul, and Georg Szalai. "Fox-Disney: Now Get Ready for the Power Struggle." The Hollywood Reporter, 16 Dec. 2107.
Jarvey, Natalie, and Georg Szalai. "How Disney Will Benefit from Becoming Hulu's Majority Owner Via Its Fox Deal." The Hollywood Reporter, 14 Dec. 2017.
Peters, Jane. "Traditional Media Companies are in Trouble." Media Management Services, 7 Aug. 2015. Accessed 28 Jan. 2018.
The major media conglomerate that is best positioned to succeed this year is Disney. Disney agreed to pay $52.4 billion to 21st Century Fox for most of their assets. The new age platform that most media conglomerates have tried to tackle is streaming. Because Disney currently lacks in that category, acquiring Fox which will allow them to achieve this feat in a large way. Bob Iger, the CEO of Disney stated that, “The business from 21st Century Fox reflects the increasing demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before” (Littleton). The most powerful media conglomerates are in order here from top to bottom: Comcast, Disney, Time Warner, 21st Century Fox, CBS and Viacom. Since Disney bought the 4th most powerful conglomerate, they basically can surpass Comcast or be its major competitor. Now these two main conglomerates can remain at the top and buy the rest of them, Disney could buy out Comcast, or vice versa. I do not agree with that previous statement by Iger. When only one or two large parties control almost all media consumption, the media they produce still follows their main models, including ideas and concepts. But these main conglomerates change how their media is given to the public. For example, media is becoming more of a streaming platform from any device and less of a TV based model. I do not agree with how Disney focuses on just one audience. One thing in my opinion that Disney has always been great at is focusing on an audience that will never forget their media consumption and even promote it to the next generation. The Associated press stated that “Advertising to children is a $17 billion industry” (Associated Press). Disney aims at children because when they grow up they will want their children to watch classic Disney movies. Disney will always continue to grow as they reach a broad range of ages for their target audience. Now with the purchase of Fox, they will have several other shows that touch demographics like race, sexual orientation, and new generation families. Because of this, Disney’s empire will never fall. But one thing Disney should not forget is that each broadcasting network chooses to put certain issues in or on their productions while others keep all the “bad voodoo” silenced. So, will Disney continue their “innocence” with their target audience, or change their tactics? I think Netflix is in for a challenging year. Since Disney now owns a major part of Hulu, which is Netflix’s major competitor, I suspect that Disney is going to try and buy Netflix. Disney’s net revenue was around $9.1 billion and Netflix’s was $561 million (Landgraf). Even though Hulu is based and only streams in the U.S., I think Disney will try to convert Hulu into international streaming with all of the extra assets they gained from their 21st Century Fox purchase. However, Comcast and Time Warner also own the other portions of Hulu, so I am interested to see what might come of this. If they are smart, Comcast will not sell, forcing Disney to spend more money or lose a valuable asset to come to an agreement with Comcast. Works Cited Landgraf, John. “FX Chief John Landgraf's Memo to Silicon Valley: Brands Matter, Even in Television (Guest Column).” The Hollywood Reporter, 4 Oct. 2017. Littleton, Cynthia and Brian Steinberg. “Disney to Buy 21st Century Fox Assets for $52.4 Billion in Historic Hollywood Merger.” Variety, Variety Media LLC, 14 Dec. 2017. Press, The Associated. “Disney's potential 21st Century Fox merger continues troubling trend of media consolidation.” WTOP, The Associated Press, 21 Dec. 2017.
The company that I believe is best to succeed in the upcoming year is Disney. With its current market cap being $165 billion, this leading enterprise is already a major force to be reckoned with. Noting the pending deal for Disney to acquire 21st Century Fox would give Disney a majority stake in Hulu, giving them a larger role in the world of SVOD (Selyukh).
According to the Hollywood Reporter, “Disney, now the undisputed leader in entertainment, is poised to overtake Comcast as the most valuable media conglomerate once the merger closes (its market cap should exceed $200 billion, while Comcast’s is $186 billion)” (Bond). With this merger on the way, Disney is set to be right on par with Comcast in terms of similar brands and stakes.
Since Disney is planning to remove all of their content from Netflix in the upcoming year to launch their own streaming service, I would not be surprised if this leads to more users leaving Netflix to subscribe to this new platform. Although Disney does not fully own Hulu (30% stake), Time Warner and Comcast also own sizeable shares in the streaming service. I can definitely predict Disney trying to buy out both of the stakes, which could lead to companies like Time Warner and Comcast facing a decline in revenue in the upcoming year.
I certainly foresee Netflix facing some struggles in the upcoming year. According to an article from CNBC, “Average viewing time decreased 13 percent over the last quarter alone — 179 minutes per month in June compared to 206 minutes in March.” (Castillo) With Netflix’s increasing subscription rates and the recent pulling of major ticket items (i.e, One Tree Hill & Friday Night Lights) I can see why Netflix is facing lower viewing rates. With Amazon increasing its original content with new shows such as The Man in the High Castle, I feel that Netflix is going to have to step up its game when it comes to its original shows. Another reason Netflix should be slightly worried is that the CEO of Disney Bob Iger has plans to make Hulu an even bigger rival to Netflix. “He told Bloomberg TV during a Thursday morning appearance that Disney will consider ending licensing deals with Netflix, just as it ended its own distribution deal with Netflix in August” (Jarvey).
Disney is definitely set up for success in 2018. I think that if they can master the art of developing their own SVOD service while still owning a stake in Hulu, then should be prepared to take on the television industry by storm. This is one of the most historic Hollywood mergers to date and I truly believe that in years to come Disney will take over the number spot in the Big Six (Five) entertainment industries.
Bond, Paul, and Georg Szalai. “Fox-Disney: Now Get Ready for the Power Struggle.” The Hollywood Reporter, 16 Dec. 2017, www.hollywoodreporter.com/news/fox-disney-get-ready-power-struggle-1068695. Castillo, Michelle. “People Are Watching Netflix Less Even as It Adds Millions of Subscribers.” CNBC, CNBC, 17 July 2017, www.cnbc.com/2017/07/17/subcribers-are-watching-less-Netflix-according-to-verto-analytics.html. Jarvey, Natalie, and Georg Szalai. “How Disney Will Benefit From Becoming Hulu's Majority Owner Via Its Fox Deal.” The Hollywood Reporter, 14 Dec. 2017, www.hollywoodreporter.com/news/how-disney-will-benefit-becoming-hulus-majority-owner-fox-deal-1067567. Selyukh, Alina, et al. “Big Media Companies And Their Many Brands - In One Chart.” NPR, NPR, 28 Oct. 2016, www.npr.org/sections/alltechconsidered/2016/10/28/499495517/big-media-companies-and-their-many-brands-in-one-chart
The major media conglomerate that is best positioned to succeed in 2018 is Disney. Besides all of the revenue it is making from its numerous Disney theme parks and products, it is about to make a whole new appearance! Estimated to start around the year 2019 will be your own streaming service for Disney shows and films. It is not necessarily as following the role of Netflix, but along the line of an Internet streaming service. Disney is following Netflix’s idea in way because it will be a service just like it streaming wise but specifically only streaming for Disney affiliated films and products associated with that company. I support this idea that Disney will be taking over the industry because of its individual streaming service it is planning on running in the near future. At this rate, Disney is planning to take over and conglomerating with as many companies as it can with its vast plans to expand in the near future.
Aside from the theme parks and Disney products sold to millions per year, the company also planning on taking back the network ABC that it once owned back in 1995. And it doesn’t stop there. The company also currently owns Hollywood Records which signs contracts with many, many well-known recording artists, such as Lucy Hale from Pretty Little Liars as well as Disney’s own native, Demi Lovato. Disney has its hands on numerous other networks in working to expand its company. For example, Disney joins the Hearst Corporation in owning the A&E Network which premiers shows such as Bates Motel as well as owning ESPN, which is one of the most central sources of sports news and sports broadcasting, today. Along with its theme parks, in 2014 Disney applied for drone-related products for “aerial display systems” (RebelCircus) in the Disney Parks as one of the many cool features when you visit. The company also owns other networks such as the ABC Family Television Channel (which is now FreeForm). As mentioned prior, one of Disney’s most recent investment is the purchasing of Marvel Entertainment which owns the rights to many well-known superhero’s that we love and envy today. The company also owns numerous studios, such as the Pixar Animation Studio and The Muppets Studio. Disney also owns the Times Square Studios located in New York City, which is the central production location for Good Morning America. So as you can see, Disney is not afraid to expand itself into new media conglomerates. These are only a few of the many things to come from the Disney Company as they are taking things in their own hands.
Disney is undergoing a deal to purchase 21st Century Fox assets for the cost of $52.4 billion. Overlapping these two businesses will allow the Disney company to own Fox’s rights and the other assets that come along with it such as hit films/shows etc. produced. These assets include National Geographic, FX Networks, twenty-sports networks, more than 300 international channels, as well as the shares it has in companies like Hulu (30%), the Star India satellite service, Endemol Shine Group (50%) and Sky (39%). This will also open the doors for the demand for a “rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before”(Littleton) in this new, “exciting and dynamic industry” (Littleton). To furthermore expand on their likely success, Disney will also have control over more content that drives the business. Because Disney will now own Fox’s studios, this means that it will be taking over hit television programs such as ABC’s Modern Family, as well as the rights to produce movies for certain Marvel characters. However, the most imperative market Disney will have control over is international. As studies have proven in the past, most of the revenue is grossed from overseas.
As previously mentioned, Disney has ownership in numerous segments of Fox’s industry. One of the major companies it has extensive control over is Hulu. Disney is planning on heightening Hulu’s streaming technology and take advantage of its subscribers that is already existing within the company. Disney plans to do this by creating a “direct-to-consumer space” (Jarvey). Owning a majority of Hulu will also give the company domination of the SVOD service as well as “a potentially large virtual bundle to help offset cable sub declines” (Jarvey). It can also be seen recently throughout the years that both Fox and Disney have been the two major operating owners of Hulu. It is also said that Disney’s equity of Hulu will increase by as much as $100 million in 2018 while Hulu is concentrating on expanding its bundle. All of these aspects combining will cause Hulu to grow at a rapid pace. Thus the companies that will be struggling are the ones that are being taken control of by major companies, such as SVOD. These companies aren’t going to make as much money as they used to because of these merging opportunities occurring from these big time companies, which will take a bulk of its revenue.
Along with Disney ‘s disclosure of its deal with Fox, it also focuses on how prominent entertainment equities will now be a part of the ‘new’ Disney family. As mentioned before, Disney will now own the assets that are attached to Fox. Therefore, Disney will now own rights to its other film production industries such as Twentieth Century Fox, Fox 2000 and Fox Searchlight Pictures. This will further spark diverse storytelling fabrications for the viewers ranging from Avatar, Deadpool, Gone Girl, Hidden Figures and many more.
Littleton, Cynthia and Steinberg, Brian. “Disney to Buy 21st Century Fox Assets for $52.4 Billion in Historic Hollywood Merger.” Variety, 14 Dec. 2017.
Jarvey, Natalie, and Szalai, George. “How Disney Will Benefit from Becoming Hulu’s Majority Owner Via Its Fox Deal.” The Hollywood Reporter, 14 Dec. 2017.
Szalai, Georg, and Bond, Paul “Disney to Buy 21st Century Fox Assets, Including Film Studio”. The Hollywood Reporter, 14 Dec. 2017.
RebelCircus.com. “Ways The Walt Disney Company is Taking Over the World”. March 17, 2015.
I believe that Amazon is in the best position to succeed in 2018. This is based on current and projected revenues and predictions from JPMorgan analyst Doug Anmuth. The company’s current $604 billion market value already puts them ahead of many other major media conglomerates and it is increasing at such a rate that it will soon reach a $1 trillion value (Palmer). The company has set itself up for success and has helped their market value to increase by incorporating a multitude of different consumer needs into its portfolio. More specifically, Amazon has acquired Whole Foods Market, an upscale grocery company, and thus now has increased the number of consumers they can reach (Palmer). Next, Amazon has expanded its e-commerce network and consumer base by introducing 3rd party sellers (Palmer). Amazon is also expected to see an increase in revenue from their advertising business. While Amazon’s advertising revenue is just 2% of its total revenue at $2.8 billion, the company is projected to have that number increase to $9 billion by the year 2019 (Palmer). Anmuth believes that Amazon could potentially become a strong enough advertising platform that it would challenge the duopoly of Google and Facebook. Perhaps most telling regarding Amazon’s future success is the growing increase of the number of users that sign up for their prime membership subscriptions. In 2016, Amazon had 71,000 global prime member subscriptions and by 2017 that number was already at 95,000 (Palmer). The number of prime subscriptions looks to also increase because Amazon has released this platform to customers in new countries opening new opportunities for company growth. These countries include the Netherlands, Mexico, Singapore, and Luxembourg (Palmer). Avoiding expansion into countries where markets are heavily control by the government helps Amazon continue to focus on areas where they can grow and will face fewer barriers (Palmer). While each of the avenues described above in isolation could make any company stronger, by incorporating all of these avenues into their plans, it is clear that this conglomerate will find much success in 2018. Anmuth agrees stating “Amazon is best positioned, in our view, [to become a third scaled digital player], with its in-market customers, scale, strong access to data, shopping history… ” (Palmer). The major media conglomerate I think that will face the most challenges in 2018 is Fox. Their challenges are most likely to stem from instability at the executive level with the possibility that their top executive talent will soon leave for another companies, such as Amazon Studios (Bond). Recently, Disney, with a market value of $200 million, recently merged with Fox’s TV Studio operation, thereby decreasing Fox’s market value to less than $30 million. While the Fox News Channel remains part of the New Fox that was not part of the merger and while it accounts for nearly 50% of New Fox’s profits, it is an asset that some executives have little interest in (Bond). Fox’s merger with Disney will also take Fox out of the new scripted television content and movie business, limiting their ability to compete with new content from companies like Netflix, Amazon, and Hulu (Zeitchik). Fox News and Fox Business will also likely take a hit from the Disney merger as the merger increases the likelihood of streaming services and decreases cable based services (Zeitchik). Perhaps one of the only moves Fox recently made that is in their favor is a new deal with Hulu, a company climbing the charts. Unfortunately, in the new deal, Disney will also get 30% of Fox’s stake in Hulu (Zeitchik).
Works Cited Palmer, Annie. “Why Amazon Could Soon Be Heading for a $1 Trillion Market Cap.”TheStreet, 10 Jan. 2018, www.thestreet.com/story/14445272/1/amazon-trillion-dollar-market-cap.html.
Szalai, Paul Bond Georg. “Fox-Disney: Now Get Ready for the Power Struggle.” The Hollywood Reporter, 16 Dec. 2017, www.hollywoodreporter.com/news/fox-disney-get-ready-power-struggle-1068695.
Zeitchik, Steven. “Disney Buys Much of Fox in Megamerger That Will Shake World of Entertainment and Media.” The Washington Post, WP Company, 14 Dec. 2017, www.washingtonpost.com/news/business/wp/2017/12/14/disney-buys-much-of-fox -in-mega-merger-that-will-shake-world-of-entertainment-and-media/?utm_t erm=.906134658554.
If I had to choose one major media conglomerate which is in the best position to succeed in 2018 it has to be Disney. There are others that could be poised for big years but to deny that Disney is clearly in line for the biggest would be naïve. The most obvious reason for this is the recent Disney acquisition of 21st Century Fox Assets for $52.4 billion (Bond). This is going to cause a major industry shake-up and further eliminate any shred of competition that was left in the major media world. If Disney weren’t already the leaders in the entertainment world, they surely are now as Disney is “poised to overtake Comcast as the most valuable media conglomerate once the merger closes (its market cap should exceed $200 billion, while Comcast’s is $186 billion) (Bond). This deal also signifies the first major step Disney is taking towards an attempt at dominating the SVOD industry.
Disney already plans to pull all content from Netflix and other streaming services this year in preparation for their own dedicated streaming service in 2019. This will be coupled with their newly acquired Hulu and ESPN’s planned streaming platform to boot (Jarvey). Disney will control what sports fans want to watch, what children want to watch, and honestly just about everything else. Disney also expects to smash the box office once again with Avengers: Infinity War which releases May 4th and the next Star Wars film, Solo: a Star Wars Story, releasing later this year. The combined box office from those two films alone could set records but Disney also has the Incredibles 2 planned for release and several others that will just be the cherry on top.
The organization that I feel is in the worst position to succeed in 2018 has to be obvious due to my Disney choice. Fox has to be in one of the murkier positions of any organization in 2018. While some could spin it as a chance to rebrand and condense the remaining assets into a more concise package, the outlook is not good. Thousands of employees are expected to be laid off (between Disney and Fox to be fair) including several high ranking executives as there is much overlap with Disney and Fox (Bond). No one is quite sure what will happen to Fox in the following 12-18 months but that is part of the reason I can’t see them succeeding in 2018.
Fox Network is staying with 20th Century Fox but Fox TV studios is heading to Disney. This doesn’t bode well “especially at a time when the best way to make money with a broadcast network is to program as many shows from corporate cousins as you possibly can, something Fox will no longer be able to do with its TV production arm owned by Disney” (VanDerWerff). It’s anybody’s guess what the future holds for the remaining 21st Century Fox assets but if I were to guess it isn’t going to be very bright.
Bond, Paul, and Georg Szalai. "Fox-Disney: Now Get Ready for the Power Struggle." The Hollywood Reporter, 16 Dec. 2107
Jarvey, Natalie, and Georg Szalai. "How Disney Will Benefit from Becoming Hulu's Majority Owner Via Its Fox Deal." The Hollywood Reporter, 14 Dec. 2017.
VanDerWerff, Todd. “What will happen to the Fox TV network after the Disney/Fox deal? Ask again later.” Vox, 5 Jan. 2018.
In terms of expected success in the next year in the media market, I think Disney is in the best position to succeed. They already have one of the most established brands in the media world when considering the fact they have made content that almost everyone has seen some form of Disney material or have visited one of their theme parks, you have consumed some form of Disney content. In addition to all of this Disney is buying 21st Century Fox in what seems to be a historic Hollywood merger. A big reason for this merger is advertising dollars in today's media market where you can stream on multiple devices and the impressions on their advertisements spread far and wide. For example "The heated competition for our attention and for advertising dollars is increasingly pitting traditional media and entertainment stalwarts against Internet and telecom giants."(Selyukh) This clearly shows how the mergers between companies acquiring content is a very competitive business and now Disney will have all new outlets that Fox previously owned for programming changing their entire lineup of offered content.
Looking at the New York Times Article we can see a few of the major impacts the fox purchase will help Disney tremendously such as," X-Men, the original ‘Star Wars' and more" and "A bigger international presence" (Hsu)If you know media you know that Star Wars and X-Men have a huge following and will help out Disney in getting that entire fan base to consume all of their product. Star Wars especially has been historical in bringing in revenue for the series because of such a dedicated fan base. Finally, Increasing the international market they would like to see grow and fox has a stake in multiple overseas media outlets.
The major media conglomerate that is positioned for challenges in 2018 I would say is Netflix. Early on in the streaming days for media content such as TV shows and movies Netflix was really the main pioneer of actually streaming live from their server but their content online has grown from low quality to a higher one with their own shows that have become popular. In the Yahoo Finance article we see in this quote exactly why Netflix will be facing challenges "So while some might see competitors like Amazon Prime Video, Hulu, HBO Go, and now Disney's forthcoming offering as a threat to Netflix" (Udland) This shows us all of the options out there people looking for SVOD in their home. Now in a market like today, there is so much media content out there so we see services "stacking" tv series and content specifically for their service so consumers will decide to choose their service over other after seeing that they offer a wide variety of shows and movies people want to watch. Now that HBO Go, Hulu and these other streaming service people are getting shows and content people want to see it really dilutes the pool of people that Netflix will be able to have as a customer. Consumers can be particular in an economical stance only wanting to pay for one SVOD service rather than multiple.
Works Cited
Barnes, Brooks, and Tiffany Hsu. “What Disney Is Getting From Fox.” The New York Times, The New York Times, 14 Dec. 2017, www.nytimes.com/2017/12/14/business/media/disney-fox-espn-tv.html.
Selyukh, Alina. Big Media Companies And Their Many Brands — In One Chart . www.npr.org/sections/alltechconsidered/2016/10/28/499495517/big-media-companies-and-their-many-brands-in-one-chart.
Udland, Myles. “Disney's New Streaming Service Shouldn't Scare Netflix.” Yahoo! Finance, Yahoo!, 10 Nov. 2017, finance.yahoo.com/news/disneys-new-streaming-service-shouldnt-scare-netflix-174745047.html.
The major media conglomerate that will succeed is Disney. The media conglomerate recently announced that they would acquire 21st century Fox, and it was the best decision on Disney`s part. It is trying to upgrade their scaling techniques to drive content, which is a major media industry M&A trend within the media conglomerates businesses. Writer Meredith Senter from LexisNexis Trade Article, describes scaling as “(A)s a tool for reducing operating costs, but also protects leverage in negotiations over program rights and retransmission rights” (1). In any rate, the Disney and 21st Century Fox merger is going to be successful because of the content and scaling decisions. Bob Iger, Disney`s CEO, presented this idea and motivator behind the decision in the quote, “The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before" (Szalai and Bond 1). Disney is an impactful force in the media and entertainment industry, and utilizing the studios and business strategies of Rupert Murdoch will be an amazing media turnout. With all of the media businesses and properties Disney controls, it will be easier for the company to secure content and control the digital platforms it is distributed on, giving them more power and less regulations to avoid FCC violations (Senter 1).
The worst media conglomerate that may have had some challenges will be Discovery. Discovery just acquired Scripps Network in attempt to keep up with other major M&A`s. I thought this was a bad decision because Scripps is not on the verge of direct-to consumer skinny bundles. This M&A is strictly for television, which makes it hard as other tech; telecommunications and media companies are following the vertical integration bandwagon. Scripps has decimated Discovery` s percentages and overall economic ranking. Reuters Contributor, Jessica Toonkel, summed up the Discovery Scripps merger in a Business Insider online article last year. Baron Crockett, a featured financial analyst, talked about the long-term vitality of the Discovery Scripps could be jeopardized because of cord cutters. Toonkel quotes Crockett in his statement, “Investors don`t trust that this can continue, and we`re not sure what turns that fear around” (p 1). Discovery followed the vertical integration strategy that was featured in Michael Wolff`s article from The Hollywood Reporter. In his exerpt, the vertical integration thesis helps television media businesses because “Distributors need to need to lock in favored, if not exclusive, relationships with big-draw content to keep or lure customers. Or, content makers need ever more content to increase their leverage with distributors” (Wolff 1). Therefore, Discovery`s decision was a practical one, even though it was not the best profitable one on their terms since their shares are down 35 percent. The Discovery Scripps merger may also need to think about rebranding in order to appeal to the target audience if it trying to convert into direct-to –consumer services, which includes Generation X, Millenials and Generation Z.
Works Cited
Bond, Paul, and Georg Szalai. "Fox-Disney: Now Get Ready for the Power Struggle." The Hollywood Reporter, 2017. Web. 29 January 2018.
Toonkel, Jessica. “Discovery is buying Scripps Networks Interactive for $14.6 billion.” Business Insider, Business Insider, 2017. Web. 29 January 2018.
Wolff, Michael. “Michael Wolff: Big Media's Only Strategy? Scale for Scale's Sake.” The Hollywood Reporter, 2017. Web. 29 January 2018.
A major media conglomerate that I believe is best positioned to succeed this year is The Walt Disney Company, otherwise known as Disney. I think Disney will be the most successful of major media conglomerates because, as a company, they are essentially a powerhouse in this field.
The Walt Disney Company is a brand that is well established several fields that generate major sources of revenue and income, such as the Walt Disney Parks and Resorts, which are present in major attraction areas of the world such as Florida, California, Tokyo, Paris, and Shanghai.
Along with the revenue it generates from Parks and Resorts, Disney has recently made a business with 21st Century Fox, agreeing to pay the company $52.4 billion for most of their assets (Bond). It is also important to note that when Disney purchased assets from 21st Century Fox, they also received Fox’s stake in Hulu, which I believe is a huge gain for Disney. At this point, in the field of streaming, Hulu is Netflix’s biggest competitors. Therefore, by Disney making the announcing that they will be pulling all their content from Netflix, and entering the world of SVOD by establishing their own streaming service along with having a stake in Hulu’s streaming service. Disney’s CEO, Bob Iger stated, “the company will, after the deal, have a chance to offer several streaming services focused on different audiences, with Hulu likely to be positioned as a more adult-oriented service, compared with a planned ESPN sports service and a planned Disney family service” (Jarvey). With all this all these upcoming changes, I believe this year will be a great year for them as a major media conglomerate.
While I do believe Disney will have quite the successful year, I cannot say the same about other major media conglomerates such as Netflix, as I believe this company will face the most challenges this year. I know this may be shocking to say, as Netflix was one of the first pioneers in the streaming industry, however, I believe their changes over the year may cause the company to face some hardships.
CNBC reported that Netflix’s viewing times have decreased by 13 percent over the last quarter alone, stating “179 minutes per month in June compared to 206 minutes in March”. (Castillo) Netflix could be seeing decreases in their viewership due to the fact that they have increased subscription rates, making the new cost $11 a month rather than the previous $10 a month. (Fung)
They have also been losing major content from companies such as FOX, which has taken the streaming rights away from Netflix and allowed Hulu to now stream their shows. This recent loss of content has included some very popular shows such as "Prison Break, Family Guy, and The Wonder Years". (Bouma) This could, of course, be due to what I previously mentioned, when Disney bought stake in FOX, they also gained stock in Hulu, therefore it was a great business deal for Fox/Disney to begin pulling content from their biggest competitors to increase their own numbers and revenue; however, this wasn’t a great business move for Netflix.
Overall, I believe that both Disney and Netflix are to major media conglomerates that we all should pay close attention to this year. With SVOD making such an impact in today's media industry, things are constantly changing and I believe my predictions will be challenged as both of these companies are aiming to continue to make an impact in media.
Bond, Paul, and Georg Szalai. "Fox-Disney: Now Get Ready for the Power Struggle." The Hollywood Reporter, 16 Dec. 2107.
Bouma, Luke. "FOX Is Pulling Almost Every Show It Has On Netflix - Cord Cutters News." Cord Cutters News.
Castillo, Michelle. “People Are Watching Netflix Less Even as It Adds Millions of Subscribers.” CNBC, CNBC, 17 July 2017
Fung, Brian. "Why Netflix Is Raising Prices Again And What It Could Mean For Cord-Cutting." Washington Post.
Jarvey, Natalie, and Georg Szalai. "How Disney Will Benefit from Becoming Hulu's Majority Owner Via Its Fox Deal." The Hollywood Reporter, 14 Dec. 2017.
So far, it would seem that The Walt Disney Company is poised for great success in 2018. They have built upon their already established media empire and global network of amusement parks and results with their recent M&A experience, a defining one for 2018. Their widely publicized acquisition of 21st Century Fox was one of the most important mergers in mainstream media in years, and has lasting implications for their many franchises, now including including X-Men and Star Wars, and will ensure they have a large collection of licensing and rights for their own streaming service. Included in their acquisition was Fox’s stake ownership of popular SVOD service Hulu. According to Disney CEO Bob Iger, “the company will, after the deal, have a chance to offer several streaming services focused on different audiences, with Hulu likely to be positioned as a more adult-oriented service, compared with a planned ESPN sports service and a planned Disney family service”. It is clear Disney seems the business potential in providing an OTT service, which will place it firmly above Comcast, the industry leader as of now. As written in the Hollywood Reporter, “Disney, now the undisputed leader in entertainment, is poised to overtake Comcast as the most valuable media conglomerate once the merger closes (its market cap should exceed $200 billion, while Comcast’s is $186 billion)” (Bond).” Disney is planning for this future, as they have been removing all Fox-owned content from Netflix for their own personal platform.
This poses big trouble for other SVOD services, primarily Netflix, as cord cutting is already well underway, with traditional TV services experiencing plummeting ratings and layoffs (see Fox). As written in an article from CNBC about the shifting power between Netflix and Disney, “Average viewing time decreased 13 percent over the last quarter alone — 179 minutes per month in June compared to 206 minutes in March.” This statistics will not be further improved by Netflix harnessing transmission rights of many Fox shows that are on Netflix, and with other corporations like Amazon also seeing widespread success in the SVOD industry, 2018 will require innovation and fortitude from Netflix if they are to stand up against what will be the largest, most powerful media conglomerate in the entire world – Disney. As an ever increasing number of cord cutters begin their voyage in SVOD services, Disney is looking to usurp them right out of the gates backed by their position as leader in the industry, and the competition between SVOD services to mitigate Disney from absorbing the market will be the stiffest competition in the media industry today - 2018 will be the beginning of a paradigm shift in SVOD services.
Bond, Paul, and Georg Szalai. "Fox-Disney: Now Get Ready for the Power Struggle." The Hollywood Reporter, 16 Dec. 2107. Jarvey, Natalie, and Georg Szalai. "How Disney Will Benefit from Becoming Hulu's Majority Owner Via Its Fox Deal." The Hollywood Reporter, 14 Dec. 2017. Castillo, Michelle. “People Are Watching Netflix Less Even as It Adds Millions of Subscribers.” CNBC, CNBC, 17 July 2017 Littleton, Cynthia and Steinberg, Brian. “Disney to Buy 21st Century Fox Assets for $52.4 Billion in Historic Hollywood Merger.” Variety, 14 Dec. 2017.
I think that amongst the 6 major media conglomerates there is an argument between only two of them for which will be the most successful. But first, let us answer the question of which of these conglomerates will face the most challenges. In my opinion Viacom is most likely to continue in struggling over 2018. Viacom’s numbers have been on the decline for quite some time now, and I just don’t see what they could do to turn things around. They have a few successful properties in small markets such as Adult Swim, but much of their major audience (young adults and teens) do not have the money nor the attention span for cable programing on VH1 and MTV. The conglomerate has been going through an identity crisis and even if they picked up their online media production their former market is already too splintered across various YouTube and other social media influencers of this generation.
The two major media conglomerates that I could see coming out on top over the next few years are Comcast/NBC and Disney. First lets make the case for Disney. Obviously, Disney has its’ original properties, as well as ABC, Pixar and more, but they have just been adding some of the largest franchises and trends in the media landscape to their repertoire. They own Marvel and the domination of the superhero genre landscape that comes with it, especially with the potential of the intellectual property they can use after buying 21st Century. Not to mention Disney’s owning and capitalizing upon the Star Wars franchise.
Disney is also the majority owner in Hulu and could utilize this in the direct to consumer market. According to Natalie Jarvey and Georg Szalaim, “The Disney boss said the company will, after the deal, have a chance to offer several streaming services focused on different audiences, with Hulu likely to be positioned as a more adult oriented service, compared with a planned ESPN sports service and a planned Disney family service.” With the ability to reach audiences directly as well as the Fox purchase Disney seems to be a frontrunner in this race. According to Guy Sheild, “Disney, now the undisputed leader in entertainment, is poised to overtake Comcast as the most valuable media conglomerate once the merger closes (its market cap should exceed $200 billion, while Comcast’s is $186 billion).”
So what is the argument for Comcast remaining the more powerful media conglomerate of the immediate future? I would argue that its best bet is the loss of Net Neutrality as Comcast provides something that even Disney doesn’t: the internet. As an ISP as well as a media conglomerate Comcast is positioned to slow down speeds of Disney owned streaming sites as well as jack up prices so that families cannot afford to watch Disney content. This would hurt Disney not only over the short term, but could effect its long term relevancy amongst children if many lower class families cannot afford internet packages in their area that have Disney content.
For now I think Disney will clearly take a lead over its’ competitors in the market, but I do not think they are untouchable, and I believe the role of Comcast’s internet service could be tremendous in this battle.
Bond, Paul, and Georg Szalai. "Fox-Disney: Now Get Ready for the Power Struggle." The Hollywood Reporter, 2017. Web. 29 January 2018.
Jarvey, Natalie, and Szalai, George. “How Disney Will Benefit from Becoming Hulu’s Majority Owner Via Its Fox Deal.” The Hollywood Reporter, 14 Dec. 2017
Masunga, Samantha and Jim Puzzanghera “Here's Who'll Benefit - and Who Might Not - If Net Neutrality Is Repealed as Expected.” Los Angeles Times, Los Angeles Times, www.latimes.com/business/la-fi-net-neutrality-20171213-htmlstory.html.
I am picking Disney as my best-positioned media conglomerate for 2018. Disney may have a demographic mostly consisting of children but they have never stopped adapting to an ever-changing environment. What’s recently had Disney in the media is their recent purchase of 21st Century Fox for $52.4 billion (Bond). When acquiring the majority of Fox they got Fox’s stake in Hulu. Hulu is probably considered Netflix’s biggest competition. Just like Netflix, Hulu has started producing original content, but Hulu only streams in the United States. Netflix streams in nearly every country. Now entering the game of SVOD is Disney. In 2019, all of their content will be pulled and will only be available for their own streaming service. This is only one example of Disney adapting to a new way of media consumption, which is why I doubt they could ever be in trouble; it seems as though Disney will own all media one day. Until that day comes, there are many other media companies in the game. There’s Time Warner, AT&T, NBC Universal, Viacom and Amazon to name a few. Apart from NBC Universal, no other conglomerate has theme parks around the world and no other conglomerate has a feeling of joy associated with their name.
ReplyDeleteDisney’s upcoming streaming service is allegedly the reason they pursued FOX, according to The Hollywood Reporter. I assume this is because Disney is perceived as children’s media. With princesses and cartoons, Disney doesn’t attract every demographic. By consuming the portion of FOX that owns FX and other film studios, Disney is dipping its toes into almost every demographic. Disney CEO, Bob Iger, has said “the company will, after the deal, have a chance to offer several streaming services focused on different audiences, with Hulu likely to be positioned as a more adult-oriented service, compared with a planned ESPN sports service and a planned Disney family service” (Jarvey).
While I do predict Disney will have an amazing 2018, I can’t say the same for all of the other media companies. A company that will face the most challenges is one that refuses to change in an adapting market. 2018 will be a year where cord-cutters continue switching to SVOD. “More and more people are ditching TVs and cable. The selling of these stocks is a true indication that traditional TV is in trouble” (Peters). As of 2015, even the top media companies began struggling with investors and cable viewers. Disney was included in the list in addition to CBS and Viacom. Companies traditionally known for television need to start introducing new things to their brand. Allowing more television shows and movies to be available on Netflix and Hulu means more money for these companies. In an SVOD-based culture, that just might be what these companies do to stay afloat. I don’t propose they all jump ship like Disney to a new streaming service, but I definitely stand by my opinion that these types of companies will be the ones to face hardship in the coming years.
Bond, Paul, and Georg Szalai. "Fox-Disney: Now Get Ready for the Power Struggle." The
Hollywood Reporter, 16 Dec. 2107.
Jarvey, Natalie, and Georg Szalai. "How Disney Will Benefit from Becoming Hulu's
Majority Owner Via Its Fox Deal." The Hollywood Reporter, 14 Dec. 2017.
Peters, Jane. "Traditional Media Companies are in Trouble." Media Management
Services, 7 Aug. 2015. Accessed 28 Jan. 2018.
The major media conglomerate that is best positioned to succeed this year is Disney. Disney agreed to pay $52.4 billion to 21st Century Fox for most of their assets. The new age platform that most media conglomerates have tried to tackle is streaming. Because Disney currently lacks in that category, acquiring Fox which will allow them to achieve this feat in a large way. Bob Iger, the CEO of Disney stated that, “The business from 21st Century Fox reflects the increasing demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before” (Littleton). The most powerful media conglomerates are in order here from top to bottom: Comcast, Disney, Time Warner, 21st Century Fox, CBS and Viacom.
ReplyDeleteSince Disney bought the 4th most powerful conglomerate, they basically can surpass Comcast or be its major competitor. Now these two main conglomerates can remain at the top and buy the rest of them, Disney could buy out Comcast, or vice versa. I do not agree with that previous statement by Iger. When only one or two large parties control almost all media consumption, the media they produce still follows their main models, including ideas and concepts. But these main conglomerates change how their media is given to the public. For example, media is becoming more of a streaming platform from any device and less of a TV based model.
I do not agree with how Disney focuses on just one audience. One thing in my opinion that Disney has always been great at is focusing on an audience that will never forget their media consumption and even promote it to the next generation. The Associated press stated that “Advertising to children is a $17 billion industry” (Associated Press). Disney aims at children because when they grow up they will want their children to watch classic Disney movies. Disney will always continue to grow as they reach a broad range of ages for their target audience.
Now with the purchase of Fox, they will have several other shows that touch demographics like race, sexual orientation, and new generation families. Because of this, Disney’s empire will never fall. But one thing Disney should not forget is that each broadcasting network chooses to put certain issues in or on their productions while others keep all the “bad voodoo” silenced. So, will Disney continue their “innocence” with their target audience, or change their tactics?
I think Netflix is in for a challenging year. Since Disney now owns a major part of Hulu, which is Netflix’s major competitor, I suspect that Disney is going to try and buy Netflix. Disney’s net revenue was around $9.1 billion and Netflix’s was $561 million (Landgraf). Even though Hulu is based and only streams in the U.S., I think Disney will try to convert Hulu into international streaming with all of the extra assets they gained from their 21st Century Fox purchase. However, Comcast and Time Warner also own the other portions of Hulu, so I am interested to see what might come of this. If they are smart, Comcast will not sell, forcing Disney to spend more money or lose a valuable asset to come to an agreement with Comcast.
Works Cited
Landgraf, John. “FX Chief John Landgraf's Memo to Silicon Valley: Brands Matter, Even in Television (Guest Column).” The Hollywood Reporter, 4 Oct. 2017.
Littleton, Cynthia and Brian Steinberg. “Disney to Buy 21st Century Fox Assets for $52.4 Billion in Historic Hollywood Merger.” Variety, Variety Media LLC, 14 Dec. 2017.
Press, The Associated. “Disney's potential 21st Century Fox merger continues troubling trend of media consolidation.” WTOP, The Associated Press, 21 Dec. 2017.
The company that I believe is best to succeed in the upcoming year is Disney. With its current market cap being $165 billion, this leading enterprise is already a major force to be reckoned with. Noting the pending deal for Disney to acquire 21st Century Fox would give Disney a majority stake in Hulu, giving them a larger role in the world of SVOD (Selyukh).
ReplyDeleteAccording to the Hollywood Reporter, “Disney, now the undisputed leader in entertainment, is poised to overtake Comcast as the most valuable media conglomerate once the merger closes (its market cap should exceed $200 billion, while Comcast’s is $186 billion)” (Bond). With this merger on the way, Disney is set to be right on par with Comcast in terms of similar brands and stakes.
Since Disney is planning to remove all of their content from Netflix in the upcoming year to launch their own streaming service, I would not be surprised if this leads to more users leaving Netflix to subscribe to this new platform. Although Disney does not fully own Hulu (30% stake), Time Warner and Comcast also own sizeable shares in the streaming service. I can definitely predict Disney trying to buy out both of the stakes, which could lead to companies like Time Warner and Comcast facing a decline in revenue in the upcoming year.
I certainly foresee Netflix facing some struggles in the upcoming year. According to an article from CNBC, “Average viewing time decreased 13 percent over the last quarter alone — 179 minutes per month in June compared to 206 minutes in March.” (Castillo) With Netflix’s increasing subscription rates and the recent pulling of major ticket items (i.e, One Tree Hill & Friday Night Lights) I can see why Netflix is facing lower viewing rates. With Amazon increasing its original content with new shows such as The Man in the High Castle, I feel that Netflix is going to have to step up its game when it comes to its original shows. Another reason Netflix should be slightly worried is that the CEO of Disney Bob Iger has plans to make Hulu an even bigger rival to Netflix. “He told Bloomberg TV during a Thursday morning appearance that Disney will consider ending licensing deals with Netflix, just as it ended its own distribution deal with Netflix in August” (Jarvey).
Disney is definitely set up for success in 2018. I think that if they can master the art of developing their own SVOD service while still owning a stake in Hulu, then should be prepared to take on the television industry by storm. This is one of the most historic Hollywood mergers to date and I truly believe that in years to come Disney will take over the number spot in the Big Six (Five) entertainment industries.
Bond, Paul, and Georg Szalai. “Fox-Disney: Now Get Ready for the Power Struggle.” The Hollywood Reporter, 16 Dec. 2017, www.hollywoodreporter.com/news/fox-disney-get-ready-power-struggle-1068695.
Castillo, Michelle. “People Are Watching Netflix Less Even as It Adds Millions of Subscribers.” CNBC, CNBC, 17 July 2017, www.cnbc.com/2017/07/17/subcribers-are-watching-less-Netflix-according-to-verto-analytics.html.
Jarvey, Natalie, and Georg Szalai. “How Disney Will Benefit From Becoming Hulu's Majority Owner Via Its Fox Deal.” The Hollywood Reporter, 14 Dec. 2017, www.hollywoodreporter.com/news/how-disney-will-benefit-becoming-hulus-majority-owner-fox-deal-1067567.
Selyukh, Alina, et al. “Big Media Companies And Their Many Brands - In One Chart.” NPR, NPR, 28 Oct. 2016, www.npr.org/sections/alltechconsidered/2016/10/28/499495517/big-media-companies-and-their-many-brands-in-one-chart
ReplyDeleteThe major media conglomerate that is best positioned to succeed in 2018 is Disney. Besides all of the revenue it is making from its numerous Disney theme parks and products, it is about to make a whole new appearance! Estimated to start around the year 2019 will be your own streaming service for Disney shows and films. It is not necessarily as following the role of Netflix, but along the line of an Internet streaming service. Disney is following Netflix’s idea in way because it will be a service just like it streaming wise but specifically only streaming for Disney affiliated films and products associated with that company. I support this idea that Disney will be taking over the industry because of its individual streaming service it is planning on running in the near future. At this rate, Disney is planning to take over and conglomerating with as many companies as it can with its vast plans to expand in the near future.
Aside from the theme parks and Disney products sold to millions per year, the company also planning on taking back the network ABC that it once owned back in 1995. And it doesn’t stop there. The company also currently owns Hollywood Records which signs contracts with many, many well-known recording artists, such as Lucy Hale from Pretty Little Liars as well as Disney’s own native, Demi Lovato. Disney has its hands on numerous other networks in working to expand its company. For example, Disney joins the Hearst Corporation in owning the A&E Network which premiers shows such as Bates Motel as well as owning ESPN, which is one of the most central sources of sports news and sports broadcasting, today. Along with its theme parks, in 2014 Disney applied for drone-related products for “aerial display systems” (RebelCircus) in the Disney Parks as one of the many cool features when you visit. The company also owns other networks such as the ABC Family Television Channel (which is now FreeForm). As mentioned prior, one of Disney’s most recent investment is the purchasing of Marvel Entertainment which owns the rights to many well-known superhero’s that we love and envy today. The company also owns numerous studios, such as the Pixar Animation Studio and The Muppets Studio. Disney also owns the Times Square Studios located in New York City, which is the central production location for Good Morning America. So as you can see, Disney is not afraid to expand itself into new media conglomerates. These are only a few of the many things to come from the Disney Company as they are taking things in their own hands.
Disney is undergoing a deal to purchase 21st Century Fox assets for the cost of $52.4 billion. Overlapping these two businesses will allow the Disney company to own Fox’s rights and the other assets that come along with it such as hit films/shows etc. produced. These assets include National Geographic, FX Networks, twenty-sports networks, more than 300 international channels, as well as the shares it has in companies like Hulu (30%), the Star India satellite service, Endemol Shine Group (50%) and Sky (39%). This will also open the doors for the demand for a “rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before”(Littleton) in this new, “exciting and dynamic industry” (Littleton). To furthermore expand on their likely success, Disney will also have control over more content that drives the business. Because Disney will now own Fox’s studios, this means that it will be taking over hit television programs such as ABC’s Modern Family, as well as the rights to produce movies for certain Marvel characters. However, the most imperative market Disney will have control over is international. As studies have proven in the past, most of the revenue is grossed from overseas.
As previously mentioned, Disney has ownership in numerous segments of Fox’s industry. One of the major companies it has extensive control over is Hulu. Disney is planning on heightening Hulu’s streaming technology and take advantage of its subscribers that is already existing within the company. Disney plans to do this by creating a “direct-to-consumer space” (Jarvey). Owning a majority of Hulu will also give the company domination of the SVOD service as well as “a potentially large virtual bundle to help offset cable sub declines” (Jarvey). It can also be seen recently throughout the years that both Fox and Disney have been the two major operating owners of Hulu. It is also said that Disney’s equity of Hulu will increase by as much as $100 million in 2018 while Hulu is concentrating on expanding its bundle. All of these aspects combining will cause Hulu to grow at a rapid pace. Thus the companies that will be struggling are the ones that are being taken control of by major companies, such as SVOD. These companies aren’t going to make as much money as they used to because of these merging opportunities occurring from these big time companies, which will take a bulk of its revenue.
ReplyDeleteAlong with Disney ‘s disclosure of its deal with Fox, it also focuses on how prominent entertainment equities will now be a part of the ‘new’ Disney family. As mentioned before, Disney will now own the assets that are attached to Fox. Therefore, Disney will now own rights to its other film production industries such as Twentieth Century Fox, Fox 2000 and Fox Searchlight Pictures. This will further spark diverse storytelling fabrications for the viewers ranging from Avatar, Deadpool, Gone Girl, Hidden Figures and many more.
Littleton, Cynthia and Steinberg, Brian. “Disney to Buy 21st Century Fox Assets for $52.4 Billion in Historic Hollywood Merger.” Variety, 14 Dec. 2017.
Jarvey, Natalie, and Szalai, George. “How Disney Will Benefit from Becoming Hulu’s Majority Owner Via Its Fox Deal.” The Hollywood Reporter, 14 Dec. 2017.
Szalai, Georg, and Bond, Paul “Disney to Buy 21st Century Fox Assets, Including Film Studio”. The Hollywood Reporter, 14 Dec. 2017.
RebelCircus.com. “Ways The Walt Disney Company is Taking Over the World”. March 17, 2015.
I believe that Amazon is in the best position to succeed in 2018. This is based on current and projected revenues and predictions from JPMorgan analyst Doug Anmuth. The company’s current $604 billion market value already puts them ahead of many other major media conglomerates and it is increasing at such a rate that it will soon reach a $1 trillion value (Palmer). The company has set itself up for success and has helped their market value to increase by incorporating a multitude of different consumer needs into its portfolio. More specifically, Amazon has acquired Whole Foods Market, an upscale grocery company, and thus now has increased the number of consumers they can reach (Palmer). Next, Amazon has expanded its e-commerce network and consumer base by introducing 3rd party sellers (Palmer). Amazon is also expected to see an increase in revenue from their advertising business. While Amazon’s advertising revenue is just 2% of its total revenue at $2.8 billion, the company is projected to have that number increase to $9 billion by the year 2019 (Palmer). Anmuth believes that Amazon could potentially become a strong enough advertising platform that it would challenge the duopoly of Google and Facebook. Perhaps most telling regarding Amazon’s future success is the growing increase of the number of users that sign up for their prime membership subscriptions. In 2016, Amazon had 71,000 global prime member subscriptions and by 2017 that number was already at 95,000 (Palmer). The number of prime subscriptions looks to also increase because Amazon has released this platform to customers in new countries opening new opportunities for company growth. These countries include the Netherlands, Mexico, Singapore, and Luxembourg (Palmer). Avoiding expansion into countries where markets are heavily control by the government helps Amazon continue to focus on areas where they can grow and will face fewer barriers (Palmer). While each of the avenues described above in isolation could make any company stronger, by incorporating all of these avenues into their plans, it is clear that this conglomerate will find much success in 2018. Anmuth agrees stating “Amazon is best positioned, in our view, [to become a third scaled digital player], with its in-market customers, scale, strong access to data, shopping history… ” (Palmer).
ReplyDeleteThe major media conglomerate I think that will face the most challenges in 2018 is Fox. Their challenges are most likely to stem from instability at the executive level with the possibility that their top executive talent will soon leave for another companies, such as Amazon Studios (Bond). Recently, Disney, with a market value of $200 million, recently merged with Fox’s TV Studio operation, thereby decreasing Fox’s market value to less than $30 million. While the Fox News Channel remains part of the New Fox that was not part of the merger and while it accounts for nearly 50% of New Fox’s profits, it is an asset that some executives have little interest in (Bond). Fox’s merger with Disney will also take Fox out of the new scripted television content and movie business, limiting their ability to compete with new content from companies like Netflix, Amazon, and Hulu (Zeitchik). Fox News and Fox Business will also likely take a hit from the Disney merger as the merger increases the likelihood of streaming services and decreases cable based services (Zeitchik). Perhaps one of the only moves Fox recently made that is in their favor is a new deal with Hulu, a company climbing the charts. Unfortunately, in the new deal, Disney will also get 30% of Fox’s stake in Hulu (Zeitchik).
Works Cited
DeletePalmer, Annie. “Why Amazon Could Soon Be Heading for a $1 Trillion Market Cap.”TheStreet, 10
Jan. 2018, www.thestreet.com/story/14445272/1/amazon-trillion-dollar-market-cap.html.
Szalai, Paul Bond Georg. “Fox-Disney: Now Get Ready for the Power Struggle.” The Hollywood
Reporter, 16 Dec. 2017,
www.hollywoodreporter.com/news/fox-disney-get-ready-power-struggle-1068695.
Zeitchik, Steven. “Disney Buys Much of Fox in Megamerger That Will Shake World of Entertainment
and Media.” The Washington Post, WP Company, 14 Dec. 2017,
www.washingtonpost.com/news/business/wp/2017/12/14/disney-buys-much-of-fox
-in-mega-merger-that-will-shake-world-of-entertainment-and-media/?utm_t
erm=.906134658554.
If I had to choose one major media conglomerate which is in the best position to succeed in 2018 it has to be Disney. There are others that could be poised for big years but to deny that Disney is clearly in line for the biggest would be naïve. The most obvious reason for this is the recent Disney acquisition of 21st Century Fox Assets for $52.4 billion (Bond). This is going to cause a major industry shake-up and further eliminate any shred of competition that was left in the major media world. If Disney weren’t already the leaders in the entertainment world, they surely are now as Disney is “poised to overtake Comcast as the most valuable media conglomerate once the merger closes (its market cap should exceed $200 billion, while Comcast’s is $186 billion) (Bond). This deal also signifies the first major step Disney is taking towards an attempt at dominating the SVOD industry.
ReplyDeleteDisney already plans to pull all content from Netflix and other streaming services this year in preparation for their own dedicated streaming service in 2019. This will be coupled with their newly acquired Hulu and ESPN’s planned streaming platform to boot (Jarvey). Disney will control what sports fans want to watch, what children want to watch, and honestly just about everything else. Disney also expects to smash the box office once again with Avengers: Infinity War which releases May 4th and the next Star Wars film, Solo: a Star Wars Story, releasing later this year. The combined box office from those two films alone could set records but Disney also has the Incredibles 2 planned for release and several others that will just be the cherry on top.
The organization that I feel is in the worst position to succeed in 2018 has to be obvious due to my Disney choice. Fox has to be in one of the murkier positions of any organization in 2018. While some could spin it as a chance to rebrand and condense the remaining assets into a more concise package, the outlook is not good. Thousands of employees are expected to be laid off (between Disney and Fox to be fair) including several high ranking executives as there is much overlap with Disney and Fox (Bond). No one is quite sure what will happen to Fox in the following 12-18 months but that is part of the reason I can’t see them succeeding in 2018.
Fox Network is staying with 20th Century Fox but Fox TV studios is heading to Disney. This doesn’t bode well “especially at a time when the best way to make money with a broadcast network is to program as many shows from corporate cousins as you possibly can, something Fox will no longer be able to do with its TV production arm owned by Disney” (VanDerWerff). It’s anybody’s guess what the future holds for the remaining 21st Century Fox assets but if I were to guess it isn’t going to be very bright.
Bond, Paul, and Georg Szalai. "Fox-Disney: Now Get Ready for the Power Struggle." The Hollywood Reporter, 16 Dec. 2107
Jarvey, Natalie, and Georg Szalai. "How Disney Will Benefit from Becoming Hulu's
Majority Owner Via Its Fox Deal." The Hollywood Reporter, 14 Dec. 2017.
VanDerWerff, Todd. “What will happen to the Fox TV network after the Disney/Fox deal? Ask again later.” Vox, 5 Jan. 2018.
This comment has been removed by the author.
ReplyDeleteIn terms of expected success in the next year in the media market, I think Disney is in the best position to succeed. They already have one of the most established brands in the media world when considering the fact they have made content that almost everyone has seen some form of Disney material or have visited one of their theme parks, you have consumed some form of Disney content. In addition to all of this Disney is buying 21st Century Fox in what seems to be a historic Hollywood merger. A big reason for this merger is advertising dollars in today's media market where you can stream on multiple devices and the impressions on their advertisements spread far and wide. For example "The heated competition for our attention and for advertising dollars is increasingly pitting traditional media and entertainment stalwarts against Internet and telecom giants."(Selyukh) This clearly shows how the mergers between companies acquiring content is a very competitive business and now Disney will have all new outlets that Fox previously owned for programming changing their entire lineup of offered content.
ReplyDeleteLooking at the New York Times Article we can see a few of the major impacts the fox purchase will help Disney tremendously such as," X-Men, the original ‘Star Wars' and more" and "A bigger international presence" (Hsu)If you know media you know that Star Wars and X-Men have a huge following and will help out Disney in getting that entire fan base to consume all of their product. Star Wars especially has been historical in bringing in revenue for the series because of such a dedicated fan base. Finally, Increasing the international market they would like to see grow and fox has a stake in multiple overseas media outlets.
The major media conglomerate that is positioned for challenges in 2018 I would say is Netflix. Early on in the streaming days for media content such as TV shows and movies Netflix was really the main pioneer of actually streaming live from their server but their content online has grown from low quality to a higher one with their own shows that have become popular. In the Yahoo Finance article we see in this quote exactly why Netflix will be facing challenges "So while some might see competitors like Amazon Prime Video, Hulu, HBO Go, and now Disney's forthcoming offering as a threat to Netflix" (Udland) This shows us all of the options out there people looking for SVOD in their home. Now in a market like today, there is so much media content out there so we see services "stacking" tv series and content specifically for their service so consumers will decide to choose their service over other after seeing that they offer a wide variety of shows and movies people want to watch. Now that HBO Go, Hulu and these other streaming service people are getting shows and content people want to see it really dilutes the pool of people that Netflix will be able to have as a customer. Consumers can be particular in an economical stance only wanting to pay for one SVOD service rather than multiple.
Works Cited
Barnes, Brooks, and Tiffany Hsu. “What Disney Is Getting From Fox.” The New York Times, The New York Times, 14 Dec. 2017, www.nytimes.com/2017/12/14/business/media/disney-fox-espn-tv.html.
Selyukh, Alina. Big Media Companies And Their Many Brands — In One Chart . www.npr.org/sections/alltechconsidered/2016/10/28/499495517/big-media-companies-and-their-many-brands-in-one-chart.
Udland, Myles. “Disney's New Streaming Service Shouldn't Scare Netflix.” Yahoo! Finance, Yahoo!, 10 Nov. 2017, finance.yahoo.com/news/disneys-new-streaming-service-shouldnt-scare-netflix-174745047.html.
Jacob Jones
The major media conglomerate that will succeed is Disney. The media conglomerate recently announced that they would acquire 21st century Fox, and it was the best decision on Disney`s part. It is trying to upgrade their scaling techniques to drive content, which is a major media industry M&A trend within the media conglomerates businesses. Writer Meredith Senter from LexisNexis Trade Article, describes scaling as “(A)s a tool for reducing operating costs, but also protects leverage in negotiations over program rights and retransmission rights” (1). In any rate, the Disney and 21st Century Fox merger is going to be successful because of the content and scaling decisions. Bob Iger, Disney`s CEO, presented this idea and motivator behind the decision in the quote, “The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before" (Szalai and Bond 1). Disney is an impactful force in the media and entertainment industry, and utilizing the studios and business strategies of Rupert Murdoch will be an amazing media turnout. With all of the media businesses and properties Disney controls, it will be easier for the company to secure content and control the digital platforms it is distributed on, giving them more power and less regulations to avoid FCC violations (Senter 1).
ReplyDeleteThe worst media conglomerate that may have had some challenges will be Discovery. Discovery just acquired Scripps Network in attempt to keep up with other major M&A`s. I thought this was a bad decision because Scripps is not on the verge of direct-to consumer skinny bundles. This M&A is strictly for television, which makes it hard as other tech; telecommunications and media companies are following the vertical integration bandwagon. Scripps has decimated Discovery` s percentages and overall economic ranking. Reuters Contributor, Jessica Toonkel, summed up the Discovery Scripps merger in a Business Insider online article last year. Baron Crockett, a featured financial analyst, talked about the long-term vitality of the Discovery Scripps could be jeopardized because of cord cutters. Toonkel quotes Crockett in his statement, “Investors don`t trust that this can continue, and we`re not sure what turns that fear around” (p 1). Discovery followed the vertical integration strategy that was featured in Michael Wolff`s article from The Hollywood Reporter. In his exerpt, the vertical integration thesis helps television media businesses because “Distributors need to need to lock in favored, if not exclusive, relationships with big-draw content to keep or lure customers. Or, content makers need ever more content to increase their leverage with distributors” (Wolff 1). Therefore, Discovery`s decision was a practical one, even though it was not the best profitable one on their terms since their shares are down 35 percent. The Discovery Scripps merger may also need to think about rebranding in order to appeal to the target audience if it trying to convert into direct-to –consumer services, which includes Generation X, Millenials and Generation Z.
Works Cited
Bond, Paul, and Georg Szalai. "Fox-Disney: Now Get Ready for the Power Struggle." The Hollywood Reporter, 2017. Web. 29 January 2018.
Toonkel, Jessica. “Discovery is buying Scripps Networks Interactive for $14.6 billion.” Business Insider, Business Insider, 2017. Web. 29 January 2018.
Wolff, Michael. “Michael Wolff: Big Media's Only Strategy? Scale for Scale's Sake.” The Hollywood Reporter, 2017. Web. 29 January 2018.
A major media conglomerate that I believe is best positioned to succeed this year is The Walt Disney Company, otherwise known as Disney. I think Disney will be the most successful of major media conglomerates because, as a company, they are essentially a powerhouse in this field.
ReplyDeleteThe Walt Disney Company is a brand that is well established several fields that generate major sources of revenue and income, such as the Walt Disney Parks and Resorts, which are present in major attraction areas of the world such as Florida, California, Tokyo, Paris, and Shanghai.
Along with the revenue it generates from Parks and Resorts, Disney has recently made a business with 21st Century Fox, agreeing to pay the company $52.4 billion for most of their assets (Bond). It is also important to note that when Disney purchased assets from 21st Century Fox, they also received Fox’s stake in Hulu, which I believe is a huge gain for Disney. At this point, in the field of streaming, Hulu is Netflix’s biggest competitors. Therefore, by Disney making the announcing that they will be pulling all their content from Netflix, and entering the world of SVOD by establishing their own streaming service along with having a stake in Hulu’s streaming service. Disney’s CEO, Bob Iger stated, “the company will, after the deal, have a chance to offer several streaming services focused on different audiences, with Hulu likely to be positioned as a more adult-oriented service, compared with a planned ESPN sports service and a planned Disney family service” (Jarvey). With all this all these upcoming changes, I believe this year will be a great year for them as a major media conglomerate.
While I do believe Disney will have quite the successful year, I cannot say the same about other major media conglomerates such as Netflix, as I believe this company will face the most challenges this year. I know this may be shocking to say, as Netflix was one of the first pioneers in the streaming industry, however, I believe their changes over the year may cause the company to face some hardships.
CNBC reported that Netflix’s viewing times have decreased by 13 percent over the last quarter alone, stating “179 minutes per month in June compared to 206 minutes in March”. (Castillo) Netflix could be seeing decreases in their viewership due to the fact that they have increased subscription rates, making the new cost $11 a month rather than the previous $10 a month. (Fung)
They have also been losing major content from companies such as FOX, which has taken the streaming rights away from Netflix and allowed Hulu to now stream their shows. This recent loss of content has included some very popular shows such as "Prison Break, Family Guy, and The Wonder Years". (Bouma) This could, of course, be due to what I previously mentioned, when Disney bought stake in FOX, they also gained stock in Hulu, therefore it was a great business deal for Fox/Disney to begin pulling content from their biggest competitors to increase their own numbers and revenue; however, this wasn’t a great business move for Netflix.
Overall, I believe that both Disney and Netflix are to major media conglomerates that we all should pay close attention to this year. With SVOD making such an impact in today's media industry, things are constantly changing and I believe my predictions will be challenged as both of these companies are aiming to continue to make an impact in media.
Bond, Paul, and Georg Szalai. "Fox-Disney: Now Get Ready for the Power Struggle." The Hollywood Reporter, 16 Dec. 2107.
Bouma, Luke. "FOX Is Pulling Almost Every Show It Has On Netflix - Cord Cutters News." Cord Cutters News.
Castillo, Michelle. “People Are Watching Netflix Less Even as It Adds Millions of Subscribers.” CNBC, CNBC, 17 July 2017
Fung, Brian. "Why Netflix Is Raising Prices Again And What It Could Mean For Cord-Cutting." Washington Post.
Jarvey, Natalie, and Georg Szalai. "How Disney Will Benefit from Becoming Hulu's
ReplyDeleteMajority Owner Via Its Fox Deal." The Hollywood Reporter, 14 Dec. 2017.
So far, it would seem that The Walt Disney Company is poised for great success in 2018. They have built upon their already established media empire and global network of amusement parks and results with their recent M&A experience, a defining one for 2018. Their widely publicized acquisition of 21st Century Fox was one of the most important mergers in mainstream media in years, and has lasting implications for their many franchises, now including including X-Men and Star Wars, and will ensure they have a large collection of licensing and rights for their own streaming service. Included in their acquisition was Fox’s stake ownership of popular SVOD service Hulu. According to Disney CEO Bob Iger, “the company will, after the deal, have a chance to offer several streaming services focused on different audiences, with Hulu likely to be positioned as a more adult-oriented service, compared with a planned ESPN sports service and a planned Disney family service”. It is clear Disney seems the business potential in providing an OTT service, which will place it firmly above Comcast, the industry leader as of now. As written in the Hollywood Reporter, “Disney, now the undisputed leader in entertainment, is poised to overtake Comcast as the most valuable media conglomerate once the merger closes (its market cap should exceed $200 billion, while Comcast’s is $186 billion)” (Bond).” Disney is planning for this future, as they have been removing all Fox-owned content from Netflix for their own personal platform.
ReplyDeleteThis poses big trouble for other SVOD services, primarily Netflix, as cord cutting is already well underway, with traditional TV services experiencing plummeting ratings and layoffs (see Fox). As written in an article from CNBC about the shifting power between Netflix and Disney, “Average viewing time decreased 13 percent over the last quarter alone — 179 minutes per month in June compared to 206 minutes in March.” This statistics will not be further improved by Netflix harnessing transmission rights of many Fox shows that are on Netflix, and with other corporations like Amazon also seeing widespread success in the SVOD industry, 2018 will require innovation and fortitude from Netflix if they are to stand up against what will be the largest, most powerful media conglomerate in the entire world – Disney. As an ever increasing number of cord cutters begin their voyage in SVOD services, Disney is looking to usurp them right out of the gates backed by their position as leader in the industry, and the competition between SVOD services to mitigate Disney from absorbing the market will be the stiffest competition in the media industry today - 2018 will be the beginning of a paradigm shift in SVOD services.
Bond, Paul, and Georg Szalai. "Fox-Disney: Now Get Ready for the Power Struggle." The
Hollywood Reporter, 16 Dec. 2107.
Jarvey, Natalie, and Georg Szalai. "How Disney Will Benefit from Becoming Hulu's
Majority Owner Via Its Fox Deal." The Hollywood Reporter, 14 Dec. 2017.
Castillo, Michelle. “People Are Watching Netflix Less Even as It Adds Millions of Subscribers.” CNBC, CNBC, 17 July 2017
Littleton, Cynthia and Steinberg, Brian. “Disney to Buy 21st Century Fox Assets for $52.4 Billion in Historic Hollywood Merger.” Variety, 14 Dec. 2017.
I think that amongst the 6 major media conglomerates there is an argument between only two of them for which will be the most successful. But first, let us answer the question of which of these conglomerates will face the most challenges. In my opinion Viacom is most likely to continue in struggling over 2018. Viacom’s numbers have been on the decline for quite some time now, and I just don’t see what they could do to turn things around. They have a few successful properties in small markets such as Adult Swim, but much of their major audience (young adults and teens) do not have the money nor the attention span for cable programing on VH1 and MTV. The conglomerate has been going through an identity crisis and even if they picked up their online media production their former market is already too splintered across various YouTube and other social media influencers of this generation.
ReplyDeleteThe two major media conglomerates that I could see coming out on top over the next few years are Comcast/NBC and Disney. First lets make the case for Disney. Obviously, Disney has its’ original properties, as well as ABC, Pixar and more, but they have just been adding some of the largest franchises and trends in the media landscape to their repertoire. They own Marvel and the domination of the superhero genre landscape that comes with it, especially with the potential of the intellectual property they can use after buying 21st Century. Not to mention Disney’s owning and capitalizing upon the Star Wars franchise.
Disney is also the majority owner in Hulu and could utilize this in the direct to consumer market. According to Natalie Jarvey and Georg Szalaim, “The Disney boss said the company will, after the deal, have a chance to offer several streaming services focused on different audiences, with Hulu likely to be positioned as a more adult oriented service, compared with a planned ESPN sports service and a planned Disney family service.” With the ability to reach audiences directly as well as the Fox purchase Disney seems to be a frontrunner in this race. According to Guy Sheild, “Disney, now the undisputed leader in entertainment, is poised to overtake Comcast as the most valuable media conglomerate once the merger closes (its market cap should exceed $200 billion, while Comcast’s is $186 billion).”
So what is the argument for Comcast remaining the more powerful media conglomerate of the immediate future? I would argue that its best bet is the loss of Net Neutrality as Comcast provides something that even Disney doesn’t: the internet. As an ISP as well as a media conglomerate Comcast is positioned to slow down speeds of Disney owned streaming sites as well as jack up prices so that families cannot afford to watch Disney content. This would hurt Disney not only over the short term, but could effect its long term relevancy amongst children if many lower class families cannot afford internet packages in their area that have Disney content.
For now I think Disney will clearly take a lead over its’ competitors in the market, but I do not think they are untouchable, and I believe the role of Comcast’s internet service could be tremendous in this battle.
Bond, Paul, and Georg Szalai. "Fox-Disney: Now Get Ready for the Power Struggle." The Hollywood Reporter, 2017. Web. 29 January 2018.
Jarvey, Natalie, and Szalai, George. “How Disney Will Benefit from Becoming Hulu’s Majority Owner Via Its Fox Deal.” The Hollywood Reporter, 14 Dec. 2017
Masunga, Samantha and Jim Puzzanghera “Here's Who'll Benefit - and Who Might Not - If Net Neutrality Is Repealed as Expected.” Los Angeles Times, Los Angeles Times, www.latimes.com/business/la-fi-net-neutrality-20171213-htmlstory.html.