Will Paramount Skydance succeed in its pursuit of Warner Bros. Discovery? Will Netflix or Apple or Amazon pounce on the chance to scoop up HBO and Warner Bros.? And will any of Europe’s big media players jump in?
As industry leaders in the global content business gather in Cannes for the annual Mipcom conference and market, there a groundswell of activity in the U.S. that is shaping up to be another round of consolidation of major media assets. Warner Bros. Discovery is the most high-profile target at present, but it’s not the only one.
The outlook for Hollywood’s biggest brands is sure to be one of the big topics of discussion during the weeklong gathering that brings buyers, sellers, producers, distributors, marketers and advertising mavens to the Croisette from Oct. 13-16. This year, however, there is sure to be more discussion than ever about the energy, innovation and investment coming from places far removed from Los Angeles and New York.
“It’s an exciting time as we become global — global in terms of production and global in terms of streaming,” David Zaslav, Warner Bros. Discovery CEO, said last month at the Goldman Sachs Communacopia + Technology Conference.
To wit, the dawn of streaming platforms with global reach such as Netflix, HBO Max, Disney+ and Prime Video has created a global entertainment marketplace that is readily accessible for consumers and producers alike. The focus on showcasing content from around the world and producing local-language series and movies has turbo-charged production infrastructure in regions of Europe, Asia, Latin America and Africa that otherwise would not have developed such a workforce with such skills or such a range of production-related venture.
And this global push has had local ramifications. The rise of the “micro drama” trend in Asia is spreading to other markets, including the U.S. It’s a prime example of how an influx of money, resources and talent can drive innovation — and profits — from the grassroots. Micro dramas are serialized streaming programs that are typically served up in one- or two-minute episodes. It also allows for micro-size budgets, an attractive proposition at a time when Hollywood is struggling with spiraling costs.
“It’s a new storytelling medium for us… immediately reaching a regional, if not global audience,” says Angeline Poh, chief customer and corporate development officer of Singapore’s Mediacorp, noting that brand partners are already integrating into the short-form scripted format.
Hit format ‘Love Island’ is still a big seller internationally.
Another recent deal that put a big spotlight on how U.S. majors are embracing technology and global media is the advertising alliance partnership between Amazon and Netflix. The streaming heavyweights have teamed up to allow Amazon Ads to sell some of Netflix’s advertising inventory in the U.S., the U.K., France, Spain, Mexico, Canada, Japan, Brazil, Italy, Germany and Australia. That well could be the first of many bridges that help tackle what has been a traditionally big gap between advertising and sponsorship sales in the U.S. and the rest of the world.
Amazon’s investment in advanced ad tech and Netflix’s need for efficient solutions to ad sales outside the U.S. make it possible. This alliance will no doubt put pressure on the major Euro players such as Germany’s RTL and ProSieben, the U.K.’s ITV and France’s Canal Plus and TF1 to seek similar solutions to gaining reach and efficiency with advertising. Advanced advertising technology systems are among the hottest areas of digital media innovation as every business sector searches for new ways to do more business with less. On that note, the growth of artificial intelligence tools — the pros, the cons and the unknowns — are certain to be a theme of Mipcom.
But with an auction on the horizon of two storied entertainment brands – the mighty Warner Bros. studio and the groundbreaking HBO – the fate of Warner Bros. Discovery is sure to take center stage in conversation.
David Ellison, Paramount’s newly minted mogul, surprised many by letting it be known that Paramount is working on a bid for WBD. The Skydance acquisition of Paramount was barely a month old when the word began to spread. In the eyes of many observers, the swiftness of Ellison’s move suggests that Skydance’s $8 billion acquisition of Paramount was part one of an ambitious strategy to take on the biggest of Big Media.
“This deal does cement Paramount’s willingness to once again invest serious capital into the business in an effort to scale long-term. In Ellison’s own words, ‘You can’t cut to grow,’” wrote Robert Fishman, senior media analyst with MoffettNathanson.
“But what if these announcements were part of a bigger plan all along? We expected an aggressive plan out of the gate for the incoming Skydance team, but rather than taking time to digest Paramount’s assets, Ellison looks poised to move much quicker, with now a widely expected bid for Warner Bros. Discovery,” Fishman wrote.
Of course, Paramount may not be the only contender for WBD. Some media analysts think Netflix will have a hard time staying on the sidelines for a once-in-a-generation opportunity to acquire a marquee studio and the premium service that set the standard for subscription TV back in the 1970s.
HBO Max is still in the midst of its international expansion in markets where Netflix is already strong. It doesn’t take a lot of imagination to see the benefits of that partnership. But that’s only one consideration. Laurent Yoon, Bernstein & Co. media analyst, suggests that swallowing up HBO Max would not expand the overall subscriber base of the enlarged company – that’s a big factor that will surely weigh heavily on co-CEOs Ted Sarandos and Greg Peters as they plot their next moves.
“There is limited room for subscriber growth, as [more than] 90% of HBO Max subscribers are Netflix subscribers, and Netflix already enjoys leading penetration in other developed and growth markets where HBO Max plans to launch. Churn may improve with an even stronger content slate, but the upside is constrained given Netflix’s already market-leading churn position,” Yoon wrote in a Sept. 29 research note on the rise of Netflix-WBD rumors.
The will-they-or-won’t-they debate around WBD is sure to continue in the Palais des Festivals and other spots in Cannes where industry insiders gather. And in between, they’ll be in the hint for the first glimpse of the next big thing that we’ll be talking about next year.
Naman Ramachandran contributed to this report.