Reorganization Alone Won't Overcome Media Obstacles
Reorganization Alone Won't Overcome Media Obstacles
It's widely anticipated that 2025 will be a year of convergence for media and entertainment industries, and it's plausible that these predictions will materialize.
However, purchasing, selling, restructuring, and merging media properties might not address the long-term issues facing numerous media organizations as they transition to a world shaped by evolving consumer habits, the advance of AI, and the erosion of classic business models.
It's simple to comprehend why media commentators, analysts, and investors anticipate an wave of mergers and acquisitions in the near future, given the largely inactive market of the past two years. Some factors that could contribute to consolidation include:
- A more favorable regulatory environment with the incoming administration
- A more robust economy
- Lower interest rates
- Excessive competition in certain sectors, especially streaming
- Persistent declines in traditional media, such as cable TV
Some preliminary maneuvers were made public in the previous year, which could set the stage for further action in 2023. Examples of these include Paramount's $8.4 billion merger with Skydance, Comcast's spin-off of most of its cable networks into a separate entity, and Warner Bros. Discovery's reorganization, potentially paving the way for an offloading of its legacy cable assets.
These actions could be the tip of the iceberg for a wave of M&As that could result in further streaming consolidation, the acquisition of independent businesses, and strategic partnerships. Warner Bros. Discovery and Comcast are perceived as the most likely to make substantial moves. Roku has also been mentioned as a potential acquisition target.
As David Bloom noted on Our Website, "given more than 80 million households and a thriving ad-supported Roku Channel generating revenue, Roku should be a major M&A target."
There might also be a series of smaller deals as independent digital publishers merge or are absorbed into larger, more resilient operations able to manage traffic pressures and ad revenue downturns.
As reported by Adweek in a recent assessment of media executive predictions, "merger and acquisition activity should burst back to life with a vengeance in 2025, fueled by an improving economic outlook and a friendlier regulatory environment."
However, larger size does not inevitably mean superiority or even the ability to endure approaching challenges. The recent acquisition of ad agency conglomerate Interpublic by its rival Omnicom Group was viewed as a defensive move to remain competitive in the face of AI threatening agency jobs and tasks, and media spending centralizing with tech giants like Google and Facebook.
"By merging, Omnicom and IPG aim to ensure their survival," according to Business Insider's analysis of that deal.
Media and entertainment companies may still face several existential threats beyond size, including the impact of AI, switched consumer habits favoring mobile consumption and creator-made content over TV and movie screens, and the ongoing decline of traditional media such as broadcast, cable, print, and terrestrial radio.
A robust M&A market may alleviate some weaknesses and could indicate optimism for media and entertainment. However, even the largest players shall still need to innovate to tackle the challenges mentioned above, by exploring fresh consumer offerings, utilizing technology effectively, and reforming their business models to meet changing realities.
In light of the predicted wave of mergers and acquisitions in the media industry, a CMO might need to strategically position their network within potential partnerships to leverage leadership opportunities. Furthermore, the merger between Roku and a larger media company could significantly impact the digital publishing landscape, necessitating adaptive leadership to navigate the resulting changes.