Media Connection: Who’s Next?

Shopping Lionsgate would help Comcast’s NBCUniversal on two different fronts. First, it would add more content to Peacock, NBCUniversal’s subscription video service. Lionsgate owns shows including “Mad Men”, “Orange is the New Black”, “Nashville” and “Zoey’s Extraordinary Playlist”. Lionsgate currently licenses these shows for a large amount of streaming services.

Second, Lionsgate owns the premium Starz network, which would fit perfectly into NBCUniversal’s offering. NBCUniversal does not have a premium network, unlike competitors WarnerMedia (HBO) and ViacomCBS (Showtime).

On the front of streaming, the Starz-Peacock combination – either as a single service or separately in a package – could expand NBCUniversal’s global aspirations. Starz is on track to have 60 million global subscribers by 2025, CEO John Feltheimer he said this week. Starz is already available in 58 different countries, which would give Peacock an advantage in its aspirations to expand.

And Lionsgate wouldn’t cost much, with a market capitalization of just $ 3.8 billion (a company value of about $ 6.4 billion). If Comcast were to keep NBCUniversal – undermining AT&T’s decision to abandon vertical integration – buying Lionsgate would be a sensible move to stay competitive in streaming wars without breaking the bank.

There is already speculation about a potential future merger between the newly created WarnerMedia-Discovery entity (assuming the deal closes) and NBCUniversal. Discovery controlling shareholder John Malone told CNBC how the combined company could be open for future mergers with NBCUniversal if regulatory forces allow it.

But the disinvestment that could happen could be too complicated and tax inefficient for that combination to happen. Regulators may not allow CNN and MSNBC to be located under the same corporate roof. A combination of Comcast’s Universal and WarnerMedia Warner Bros. – 2nd and 3rd largest film studio in terms of box office revenue in 2019 i 2018, the last full year of theatrical releases – can also be a start.

A more logical combination would be WarnerMedia-Discovery and ViacomCBS.

Shari Redstone has a broadcasting network – CBS. WarnerMedia-Discovery doesn’t, so it fits. (A combination of CBS and NBC under one roof would be a major barrier to ViacomCBS-NBCUniversal mergers.)

Unlike NBCUniversal, ViacomCBS does not have a large cable news network. This makes maintaining CNN more sustainable.

Although ViacomCBS also owns a film studio, Paramount has been much smaller at the box office in recent years than Universal. Among global film studios, Paramount was sixth in box office revenue in 2018 and 2019. Assembling Paramount and Warner Bros. would be easier to sell to antitrust concerns.

The biggest complication would be if Redstone is willing to give up or dilute its controlling shares of ViacomCBS. That’s what Malone did to link Discovery and WarnerMedia, so now there’s a template.

This is the hardest to sell. Disney doesn’t really need it AMC Networks. It is goes quite well with the content it has.

But given that Disney-owned Hulu licenses so much of its content, it’s sensitive that it will lose some of its hit shows. MGM, for example, makes a “Maid’s Tale.” Now that Amazon has bought MGM, it is unclear whether the series will remain on Hulu once the deal is concluded.

The owner of The Walking Dead, IFC Films and Sundance Now could give Hulu a boost for adult-themed content. That would balance a robust children’s offering at Disney + and sports at ESPN +. The AMC predicted will have at least 9 million streaming subscribers by the end of 2021 and 25 million by the end of 2025. That is far from The current 41.6 million Hulu or 103.6 million Disney +, but it is proof that there is at least some audience for the program.

And while the cable is slowly dying, it is not yet dead about 85 million American households i still subscribe to some form of linear tv.

Disney’s ESPN is still the lifeblood of the traditional pay-TV package. Connecting AMC Networks ’cable networks to ESPN would protect membership fees, as pay-TV service providers have always been reluctant to give up ESPN.

The Dolan family controls AMC networks. The Dolans have known for years that AMC Networks is disproportionate and should be combined with a larger media fish. If the Dolans don’t want to sell, they won’t. But AMC Networks is relatively small with a market estimate of $ 2.2 billion and about $ 4 billion in company value. Disney could easily buy the company in cash.

However, Disney’s previous acquisitions – Pixar, Marvel, Lucas Films – were for intellectual property. Does AMC Networks own enough valuable IPs to pay off part of the stock? And is that IP appropriate for a family to fit into a company with theme parks?

That may be why the Disney-AMC deal hasn’t already happened.

Publishing: NBCUniversal is the parent company of CNBC.

WATCH: Amazon’s MGM acquisition will add value to key customers: Mark Mahaney