Analysis: A Sea Change As Consolidation Fever Has Struck TV Station Groups. Looks Like the Fever Might Spread to MSOs as Well. What's Going On? WSJ's Markets Pulse
"In the media industry, it’s once again important to be big," write Keach Hagey and Shalini Ramachandran in the Wall St. Journal's Markets Pulse column (Warning: the WSJ is behind a pay-wall and may charge you to read this article).
The article continues, "Tribune Co’s $2.73 billion agreement to buy Local TV Holdings LLC’s 19 television stations, unveiled Monday, is the biggest in a spate of TV station acquisitions that so far this year totals nearly $9 billion, according to SNL Kagan.
"These deals, along with signs that cable-TV executives are looking to spark a consolidation wave in that industry, signal a sea change in the media sector. After a decade in which media industry deal-making was heavily concentrated on unwinding mergers struck in the past, executives once again have an appetite for acquisitions."
So what's going on?
Says the article, "[T]hese deals are concentrated on the distribution side, among TV station owners and potentially cable operators [and] reflect a recognition that with growth in pay television slowing sharply, economies of scale are vital."
The piece continues, " 'Our investment thesis is simple: scale matters,' said Tribune CEO Peter Liguori, during a call with analysts Monday morning. Or as Liberty Media Corp. Chairman John Malone, a pioneer of the cable industry, put it last month, 'the whole name of the game in the cable business is scale.' "
The story then explains, "The twist is that both station owners and cable operators are hoping that bulking up will improve their bargaining leverage with each other."