Merge Right – Or Wrong

Back when I managed WXRT and The Score, we were owned by a person who lived in Chicago. I always used to tell people that what we made minus what we spent, he kept. Then in 1995, he cashed-out (a very smart move) and sold the stations to Westinghouse. Yes, the company that made radios also owned many of the stations that played on those radios. But shortly after the sale, Westinghouse decided to stop making radios and owning stations. So, Westinghouse sold the stations to CBS. In short order, the stations went on an ownership journey that led from CBS to Infinity to Viacom, back to CBS, then to Entercom Communications who decided to change their name to Audacy.

My ownership journey is really a microcosm for how mergers and acquisitions work in the entertainment industry. It’s awfully hard to keep up with who owns what these days and it looks like we’re on the precipice of another ride on the ownership merry-go-round. That’s because there are simply too many video options. It used to be you picked a Cable or Satellite provider and paid for the channels that they provided. Maybe you’d add HBO or Showtime, but that was everything you’d ever need right? Well, it turns out we were wrong thanks to a company that used to ship videos to our homes – Netflix.

In 2007, Netflix realized that high-speed home internet was going to do to them, what they did to Blockbuster – put them out of business. So, they changed gears and started the first subscription streaming service. Other companies woke-up and soon, we had Prime, Hulu and Apple TV+. The next thing we knew, the TV networks and movie studios were all jumping into the stream; some with more than one. For example, Disney/ABC owns Disney+, ESPN+ and Hulu, Paramount/CBS has Paramount+ and Showtime, Warner Bros/Discovery has Max and Discovery+, Comcast/NBC owns Peacock, Fox has Fox Nation and MGM owns MGM+. Even PBS has its Passport service. And that’s just the shallow end of the stream. There are many other smaller, eclectic services. It’s simply unsustainable waters.

Which is why it’s once again, time to play the consolidation game. Disney recently fired an 8.1 billion-dollar shot by purchasing from Comcast, the remaining third of Hulu that it didn’t own. While it already offers the Disney Bundle (Disney+/ESPN+/Hulu) cost package to consumers, this allows "The Mouse” to work even more Disney magic in its pricing for us and cost-savings for its stockholders. With that done, currently, all eyes are on "The Eye”, CBS, or to some, Viacom/CBS, which these days is owned by Paramount. That merger goes all the way back to the good old days of 2019. Now there’s talk of a merger between Paramount and WBD (Warner Brothers/Discovery). That marriage of Warner Bros. and Discovery Networks turns two in April of 2024. Not to get too deep into the M&A woods, but two years of ownership is an important milestone for a company to use what’s known as a Reverse Morris Trust. While that sounds like a football play, it’s more of a way to play Uncle Sam and avoid taxes.

What does all this mean to us if it happens? Well, a whole lot of streaming services and Cable-TV channels would live under one roof. Talk about getting the max, one company would own Max and Showtime plus two plusses in Paramount+ and Discovery+. There would also be a ridiculous number of cable channels. A merged Warner Bros/Discovery and Paramount/CBS would include (to name a few) CNN, HLN, TNT, TBS, Tru, Discovery Channel, Cartoon Network, Food Network, HGTV, TLC, Comedy Central, MTV, VH-1, Nickelodeon and BET. That’s a whole lot of TV channels under one owner.

Why do I think that’s not going to be a good deal for us? Some channels will certainly go the way of The Wedding Channel (remember that flop?) while others will probably merge like Nickelodeon and Cartoon Channel. Whatever happens, when a big fish gets eaten by a bigger fish, us minnows are left on the hook to pay higher prices.

So, what started back in 2007 as a way for us to pay a little ($8.99 a month) to get quality programming with no commercials on Netflix, has turned into a giant conglomerate feeding frenzy. When the dust settles, we will likely be paying more for less choice. By the way, that Netflix price has almost doubled since its streaming debut. The only possible good news is that when everyone has eaten their fill, there may finally be a way to bundle all of our channels on a single viewing guide and pay just one monthly price for all of it. Hey, I have an idea – why don’t we do that and just call it Cable-TV?

Since retiring from Radio, I've spent my time researching TV, Cellular and Internet industries and their costs. I've saved households thousands of dollars a year. For a free Tech Check of your bills, email hmwellsradio@gmail.com or visit www.lowertechbills.com because you may not have the time to do all the research, but I do.