On Tuesday AT&T and Time Warner received approval for their $85 billion merger that brings together channels like CNN, HBO with the number two mobile carrier in the US. The deal is just the start of what is shaping up to be a very busy year for technology and media mergers and acquisitions. Less than 24 hours after the AT&T – Time Warner trial concluded, Comcast to made a $65 billion all cash bid against Disney for 21st Century Fox.
From a demand-driven perspective, the flurry of deals makes sense. Traditional media companies are in a world of hurt. Technology has transformed the way people consume information and entertainment. People are moving from analog to digital, from cable to online, and from owning to streaming. Now more than ever, content is king and technology players like Netflix and Amazon are investing big bucks in creating their own exclusive entertainment.
Adapting to these changes requires a swift response to maintain a foothold in the marketplace and acquiring is perhaps the fastest way to gain scale, access to new markets, bring in new expertise, and add proven solutions. At the same time, an acquisition can block competitors from buying the same company and gaining a competitive advantage. Acquiring a content provider or digital expertise can be the best way for media players to remain relevant with consumers today and in the future.