After Time Warner, A Look at Other Media Targets

A shopping list from BTIG analyst Rich Greenfield

With Time Warner being purchased by AT&T, analyst Rich Greenfield took a look at the other companies in the media sector to see which might be attractive takeover targets and which buyers might be in the market.

Here are some of his thoughts.

  • Disney: Too large to be bought beyond a tech company such as Apple or Google.  Not to mention, Disney has signaled it is thinking of investing in distribution beyond its 1/3 stake in MLB’s BAMTECH.  If not Netflix, unclear what Disney is thinking about to fix its lack of distribution.
  • Fox: Given Murdoch family ownership control, Fox is not for sale. Fox wanted to buy Time Warner but failed, and now is in no position to make another run financially (EBITDA far lower than projected, stock price down sharply and value of ownership in BSkyB, which it could monetize to finance a deal, down significantly as well).  Fox has cut their buyback and is looking to make strategic acquisitions, the question is what?  Unlike Disney, they are not capable of a major acquisition like Netflix.
  • Comcast/NBC: Comcast has already bought more content this year via DreamWorks Animation and has talked to the value of kids content implying they want even more.  We have to imagine Comcast will be even more focused on wireless as we head into 2017, if the AT&T Time Warner merger is approved – can Comcast really resist buying T-Mobile?
  • Viacom/CBS: Given Redstone family control, they are not for sale.  We continue to expect a merger of these two companies to increase their scale.  We suspect one of the reasons AT&T is moving so quickly is that CBS was hoping to go after Time Warner following its Viacom merger.  We believe that like Fox and Disney, a combined Viacom/CBS will be looking for additional assets.
  • Discovery: While we are sure Discovery would like to be sold at a valuation such as ATT’s acquisition of Time Warner, it has no prize assets like HBO or Warner Bros and its cable networks do not have the sports rights, at least domestically, that help secure distribution. Hard to see how a distribution player benefits from acquiring Discovery.
  • AMC Networks: We believe the Dolans would love to sell AMC sooner than later. Walking Dead is still an incredibly valuable show that AMC produces and distributes, but without a wide array of must-have content, it is hard to see how acquiring AMC helps anyone in the distribution world – not big enough and not enough great content.
  • Scripps: While Scripps has not executed well in mobile, its content could be of value in a direct-to-consumer world.  In addition, with low sub fees, it has the least to lose going direct-to-consumer as the bundle breaks.  That being said, given its size, it is also hard to see how it really provides meaningful content strength to a distributor – particularly, as the barrier to entry to creating similar content in the mobile world is low.
  • MSG Networks:  We continue to believe MSG Networks, covered by Brandon Ross (MSGN, Buy, $30 PT) was separated from MSG with the idea of an eventual sale.  While it is small, it is exposed only to the important New York market and it could be a strategic tuck-in acquisition for a Fox or Comcast or a distributor with exposure to the NY market such as Charter or Altice.