The StreamTV Show wrapped Thursday with an analyst roundtable that trained its collective vision on predicting where the next wave of media and entertainment M&A might break.
AT&T is currently orchestrating two of the biggest mergers and acquisitions in the TMT space by spinning off its linear TV business (DirecTV, U-verse and AT&T TV) to TPG Capital and spinning off WarnerMedia—including HBO, Turner and Warner Bros.—and combining it with Discovery Inc. At the same time, Amazon is pursuing an $8.45 billion deal for MGM Studios.
TV[R]EV’s Alan Wolk, GBMonday’s Gary Schanman and nScreenMedia’s Colin Dixon all offered up some predictions for the next calendar year—network primetime shows simulcasting on streaming platforms, Apple buying Spotify and smaller streaming services like CuriosityStream getting snapped up. But the analysts spent the bulk of their predictions lightning round with FierceVideo Publisher Kevin Gray focused on who might buy who next or who might be the next acquisition target.
Roku
Roku has achieved substantial scale in the connected TV platform ecosystem and is continuing to grow its ad-supported streaming and original content businesses. But that doesn’t necessarily mean that the company would be averse to combining with someone that could give it more of an edge to keep competing with Amazon, Google and Apple.
Schanman said that Roku’s strength lies with its operating system and noted that the company’s device margins are not particularly good. He said Roku could find more ubiquity by combining with a tech giant or device OEM. “I believe that they need scale on that so honestly it’s either Microsoft or it’s one of the TV manufacturers,” he said.
Wolk came in from left field and predicted that Comcast would buy Roku.
“[Comcast has] all its their distribution in place and no one wants that damn Flex device, but if they were able to give people a Roku instead, suddenly they’d have a lot more traction,” he said.
Dixon went maybe even further out in left field and predicted Disney would buy Roku.
“The reason is simple; Roku is a free, advertising-driven business. And Disney doesn’t have that. Roku would bring it,” he said.
Lionsgate
Lionsgate is a prime acquisition target especially after Amazon went after MGM, which had been speculated as a possible purchase for Apple. With MGM now off that table, Dixon said that Lionsgate is the next logical target for Apple.
“You’ve got to get more stuff in Apple TV+. You’ve got to put some money up some time. So, I’m going to say they’re going to buy Lionsgate,” he said.
Wolk concurred, likening the Apple TV+ app to boutique shops in SoHo with only one rack of “thoughtfully laid out linen blouses and that’s it.”
Schanman called a potential Lionsgate acquisition “MGM Part 2.”
“This is about a consolidation of people that are already in the original production space but need to do it better at scale. Disney is 50% of the entire theatrical market, for example. So, I think it’s probably going to go to ViacomCBS or NBCUniversal if it’s not someone like Apple, because I think they need scale. Each of their studios are very small.”
Netflix
It can be hard to imagine a streaming player as dominant as Netflix being bought or sold. But, as Schanman pointed out, Netflix has a tremendous amount of debt and a domestic growth challenge, although the service is still growing steadily in international markets.
“Honestly, the best cultural fit is with Apple, and I think it does matter. But I actually feel there are only a handful of companies that can take on the debt and market cap and so I’m throwing it out there to be controversial, but Microsoft,” he said. “Because they let companies they buy be themselves.”
Wolk doesn’t see Netflix getting bought any time soon but, if it did happen, he said it would be a company like Amazon that has a ton of money and would be able to keep Netflix as it is. He said a deal like that would “get around the advertising problem” because Amazon can form corporate sponsorships that point users toward products on the e-commerce platform.