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US Media Consolidation By Brendan Filipovski
The 1996 Telecommunications Act brought a wave of mergers and acquisition in the US TV and telecommunications industry as companies jostled for the future. The future came, it was Netflix, and now TV and telco companies are scrambling to stay relevant. They are also watching over their shoulder as Amazon, Google, and Apple move into the industry. In the last two years, there has been unprecedented consolidation in the US TV and tel-co industry. CBS remerged with Viacom in December 2019 in an all-stock deal worth around $30bn. Disney acquired 21st Century Fox in March 2019 $71.3bn. This included 20th Century Fox film studio but did not include Fox News and several other Fox TV assets which were spun off into Fox Corporation. AT&T acquired Time Warner in June 2018 for $85bn. Comcast bought European pay TV giant Sky in 2018 for $38.8bn. Many of these M&As were also contested pushing up the value of the deals. For example, Comcast also tried to buy 21st Century Fox forcing Disney to up its bid. This consolidation has largely been driven by the rise of Netflix. Netflix started as a DVD mail-rental service in 1997 but is now a media behemoth with a capitalisation of $151bn. In 2002, it began its streaming service. In 2013 it aired origi-nal content for the first time. It now has over 60m subscribers in the US and was 19.1 percent of all US internet traffic in 2018. Netflix has hurt traditional TV companies because its growth in subscribers has eaten into their ratings and the subscriber numbers for cable TV. From 2014 to 2018-9, Niel-sen found that the average prime-time ratings for broadcast TV fell by 20 percent, and 35 percent for the 18 to 35 demographic. In 2012, Netflix had 23.4m US subscribers and the cable TV companies had 52.6m. In 2017, Netflix had 50.8m and cable TV 48.6m. This has led to less advertising revenue for traditional media and less subscription rev-enue for cable TV. Some cable companies have worked out a deal with Netflix to bundle it with its other services but the growing spectre of subscribers “cutting the cord� and moving from pay TV to broadband-only and streaming services like Netflix remain. Netflix has grown because its streaming service offers several functional advantages over traditional linear TV. Netflix allows viewers to watch their favourite TV show or movie whenever they want. Netflix also makes all episodes available at once. On average Netflix users watch two episodes in a sitting and watch a whole series within five days.
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