Direct-to-Consumer Focus Signals Little MVPD, OTT M&A in 2020

Don't expect big, transformative mergers and acquisitions in entertainment and media this year, experts said in recent interviews. Companies are focused on direct-to-consumer offerings and on integrating and rationalizing their properties. Big takeover targets already "are gobbled up," said wireline and wireless lawyer Laura Phillips of Drinker Biddle. Entertainment industry lawyer Paul Bernstein of Venable said there's interest in opportunistic deals like buying content libraries, and 2020 and 2021 will be a "war of attrition" in streaming service competition after having bulked up content holdings. "Now, people are going to start firing their rockets," with casualties being money burned through, he said. Echoed TVRev analyst Alan Wolk, "Everybody is kind of waiting to see how 'flixopocalypse' plays out." The "next decade will be the stage for a clash of titans," LionTree CEO Aryeh Bourkoff wrote investors. The scale of incumbents will limit some startups and the number of potential buyers, meaning more M&A among smaller or mid-sized companies, he predicted. New Street Research's Blair Levin noted questions remain if Comcast might buy T-Mobile regardless of whether T-Mobile/Sprint happens. There's an increased bipartisan sense antitrust enforcement hasn't been sufficiently aggressive, creating urgency to complete deals before DOJ gets more active, perhaps under a Democratic administration, Levin said. A question is whether anyone -- particularly a tech company like Apple or Google or Facebook -- might want to buy Netflix, Levin said: The current antitrust focus on Facebook and Google might make such a deal difficult, though. Vernable's Bernstein said it's unlikely Apple will buy Netflix since Apple seems to be dipping its toe into streaming video as an ancillary service. TVRev's Wolk said major streaming service M&A and consolidation is at least three to five years off. He said there's an outside chance ViacomCBS might buy Discovery for increased size to compete with Disney or AT&T. There could be more activity in partnering and bundling media services, such as offering another company's streaming music service alongside a streaming video product.