Businessman and reality TV star Donald Trump is heading for the White House and media analyst Rich Greenfield of BTIG Research laid out the top six ways the new president could alter the future of the industry.
“A key question when it comes to Trump is whether he leans more Republican or more Populist as it relates to media/tech policy and his government appointments,” Greenfield said in a post Wednesday. “Furthermore, while Trump will be President, we live in a government built on a foundation of checks and balances, and that there is division between Trump and his own party.”
Here are Greenfield’s points:
AT&T-Time Warner and Media Consolidation
“The Trump Presidency adds to the risk surrounding regulatory approval of AT&T Time Warner. Trump was quite clear after the merger was announced that he believed the transaction should be blocked by regulators,” he said. "We have to believe a Trump Presidency alters how AT&T Time Warner approaches regulators.”
He adds that “if President-Elect Trump’s 'Big is Bad' comments are simply campaign trail rhetoric, it may lead to more deals throughout the sector. However, to the extent Trump strongly opposes the AT&T Time Warner deal, it is not clear if another major company could buy Time Warner, reducing the support the stock could find if the AT&T Time Warner deal fails to win regulatory approval. Honestly, until we understand the extent of Trump’s views on the dangers of media industry consolidation, it is impossible to know what deals could get done under his administration (if AT&T/Time Warner is bad, is Comcast/T-Mobile bad? Or how about Disney/Netflix?).”
ISP Regulation Could Disappear, Leading to Higher Prices
"Net Neutrality, via Title II reclassification, was staunchly opposed by both FCC Republican commissioners, when it was pushed through the FCC during the Obama Administration. President-Elect Trump tweeted in 2014 that the Obama Administration’s Net Neutrality push was a 'top down power grab.' We have to believe that a repeal of Net Neutrality could be on President-Elect Trump’s agenda.”
He adds that “if broadband is reclassified as a Title I information service from a Title II telecom service it would be a clear win for ISPs (cable system and telecos) and a negative for media and tech companies that fear the terminating monopoly held by ISPs. Peering/Interconnection could become more expensive, along with lower/stricter broadband data caps. We have to imagine anyone focused on OTT video (including vMVPDs) would view a repeal of Net Neutrality as a meaningful negative.”
Retrans Could Surge
"While MVPDs may benefit from ISP-regulatory relief under President-Elect Trump, we suspect broadcasters will have less concern about pushing retrans even faster. When asked what is holding back retrans rates from climbing even faster than they have over the past few years (focusing on viewership vs. sub fees received), broadcasters have continually highlighted the risk of regulation if they push too hard too fast. Under President-Elect Trump those fears likely subside, enabling broadcasters to get more aggressive with their retrans demands. In turn, this could be a clear negative for MVPDs."
Referendum on Political TV Ad Spend
"President-Elect Trump was able to win with a dramatically lower TV ad spend than any candidate in recent history. Trump utilized an array of digital platforms to reach viewers directly or at a far lower cost than if he had spent on TV. We wonder whether his success pushes political candidates in the future to rethink how they allocate their marketing spending between TV and digital platforms. Could be a meaningful negative for broadcasters, offsetting the aforementioned benefit from higher retrans."
Set-Top Box Regulation DOA
"It already appeared the FCC’s hopes of set-top box regulation were hitting a wall. Under Trump, we have to believe the FCC will abandon its attempt to enforce any form of app-based rollout requirements on MVPDs. Worth noting that MVPDs are already moving toward an app-based approach across devices, spurred by a growing array of virtual MVPDs (vMVPDs)."
Media Industry Retribution
"The media industry broadly defined (spanning news and entertainment organizations) aggressively supported Democratic Nominee Clinton. Unclear what President-Elect Trump could do, but certainly an unquantifiable risk for the sector overall. Donald J. Trump was a wild card as a candidate. We will see if the same applies to his Presidency."