It would seem that the media industry’s merger fever has broken, based on the comments made by top executives at programming companies during earnings calls in the past few days.
When Rupert Murdoch called off 21st Century Fox’s bid for Time Warner it was time for other programmers to ask shareholders to have faith in corporate strategy to push stocks higher rather than dream of buyout profits.
At Scripps Networks Interactive, seen as a takeover candidate by Discovery Communications and others, CEO Ken Lowe told analysts on the company’s second-quarter earnings conference call: “As as the world moves more and more to potential consolidation, we think our networks and our company is going to play well just as we are currently comprised. So we're very comfortable in forward in this environment.”
Being bigger isn’t necessarily the best thing for a company, Lowe added. "I think the face of all of this consolidation we get caught up in just putting everything together and therefore, size and scale are going to become more important. It's never been true in any industry,” he said. “Quality, quality brands, consumer engagement and really, bringing the cash register for the advertisers is what's going to win ultimately.”
In a similar vein, AMC Networks has been looked at a merger candidate since it was spun off from Cablevision Systems. It has also reportedly been in talks to buy a piece of BBC America, giving it one more channel to sell to distributors and advertisers.
AMC CEO Josh Sapan said he wasn’t in a position to comment on those report. But he noted that the company had made two large acquisitions—Sundance Channel and Chellomedia and that those helped explain the company’s strategy.
“They fit into what we consider to be the highest priorities of the company and the areas in which we operated, we hope, with some degree of confidence, if not excellence,” he said.
“We don't anticipate, as we go forward, that there will be a lot of them either in the future,” Sapan went on. “We do, however, think that should something come along that has those characteristics of good financial profile close to what we do every day for a living and manageable against our desired level of leverage, we'll be active in it.”
Executives at the bigger companies took the no-big-deal pledge, if only to assure investors happy with the huge stock buybacks announced by 21st Century Fox, Time Warner and CBS that those checks would keep coming.
“With respect to all the talk about M&A, let me be clear,” said Joe Ianniello, chief operating officer at CBS,, which announced a $6 billion buy back as well as a 25% increase in its dividend. “We obviously look at every opportunity that arises within our industry. But here at CBS we will continue to be very disciplined in our approach to M&A and we do not see anything out there that would change the capital return plan we just laid out.”
“We have no plans to pursue any other third-party content company as an alternative to Time Warner,” said Fox COO Chase Carey on 21st Century Fox’s earnings call Wednesday. “We don’t need more scale. There are opportunities created by having more scale, but we have industry-leading scale in terms of brands and content.
And Murdoch himself took issue with a question that presumed that if Fox had cash it would buy anything that was for sale. “I think our actions over the last few years when we had had this liquidity speak to how we conduct ourselves.”