Report: TV Production Mergers on the Rise

With ownership of TV programming rights a vital asset in the burgeoning demand for episodic programing across broadcast, pay-TV and subscription streaming, production company mergers have grown nearly 20% compound annual growth rate in the past five years – from 42 deals in 2013 to 102 deals in 2017, according to new data from IHS Markit.

Citing ongoing advertising pressure and audiences migrating to on-demand platforms, IHS says broadcasters are exploring new revenue sources from content production and distribution. With increased competition between traditional linear channels and online players, creating TV content is a stronger option than licensing from third parties.

The United Kingdom ranked the most active market in terms of number of mergers and acquisitions. However, in terms of deal value, the United States and China led.

“Both large and small companies are trying to find ways to internationalize, which is why Chinese companies have been gobbling up production studios in the United States, and the major Hollywood studios have been building local production networks in key foreign markets,” Tim Westcott, director of research and analysis for programing, said in a statement.

Increased investment in content by Netflix, Amazon and other content buyers has spearheaded M&A activity among content creators. Indeed, deals for scripted producers have grown nearly 30% — from 15 deals in 2013 to 54 in 2017. In comparison, acquisitions of unscripted producers have grown 8%, due to the shift of M&A activity to scripted producers.

The top mergers and acquisitions were led by ITV Studios and Fremantle Media, both of which have invested in a large number of start-up content-production companies. Of the 77 start-up companies launched between 2013 and 2017, 32 were drama specialists. Nearly half of these 32 drama specialists were launched in 2017, reflecting a significant surge in scripted drama investment.

Liberty Global invested in global producers All3Media, ITV and Lionsgate, while Vivendi took an interest in Banijay Group and 21st Century Fox acquired a 50% stake in Endemol Shine.

“These deals … highlight the strategic importance of owning content producers, for all those wanting to attract and retain viewers, subscribers and the revenue they deliver,” said senior research analyst Aled Evans. “The global producer networks offer these start-ups co-production finance mechanisms, worldwide contacts and funding. In return, the investor company gains rights for programming to sell internationally.”

CBS COO: We ‘Cannibalize Up’ Cord Cutters

In an era of cord cutting and fragmentation of home entertainment and television distribution, CBS says its total viewership data has grown.

Speaking March 6 at The Deutsche Bank 2018 media, telecom & business services confab in Palm Beach, Fla., COO Joesph Ianniello said combining traditional pay-TV subscribers with online TV and direct-to-consumer has resulted in more total subs for CBS than a year ago.

“Not a lot of media companies can say that,” Ianniello said, adding CBS is available on the “broadest tier” of distribution channels.

With more than 5 million combined subs for its over-the-top video platforms (Showtime OTT, CBS All Access), the COO contends the services have “really taken off,” in addition to enabling CBS to sell content to new distribution channels at a significantly higher price than traditional MVPDs.

“So, the value proposition we think we’re bringing to [pay-TV] distributors is compelling,” Ianniello said.

Indeed, with increasing numbers of consumers shunning pay-TV for alternative channels, Ianniello says CBS is able to “cannibalize up” those consumers in the same way Internet Service Providers increase revenue by hiking up broadband access fees.

“If a consumer switches to YouTube TV or CBS All Access, each leg [or service] we get more money the way we’ve priced it,” he said.

Ianniello said the learning curve on OTT has been significant, contending premium channel Showtime never had a real subscriber until bowing an OTT platform.

Specifically, the executive said Showtime’s pay-TV distributor, in addition to third-party broadcast ratings tracking services such as Nielsen had all the consumer data.

“Now, [via OTT] we have perfect information in terms of consumption, what [subs] watch [and] how they watch,” he said. “It makes us smarter in our programing and [makes] advertising much more effective.”

CBS All Access, which costs $5.99 monthly with limited ads; $9.99 without, will launch upwards of seven original series in 2018, including a new season of “Star Trek: Discovery” and pending reboot of “The Twilight Zone” from Oscar-winner Jordan Peele (Get Out) – in addition to select live TV, NFL game telecasts and catalog programing.

“Netflix doesn’t do live,” Ianniello said. “Netflix doesn’t have the library we have. From a value perception, we’re feeling pretty good.”

Formula 1 Launching OTT Video Racing Service

As expected, Formula 1 is set to launch a proprietary over-the-top video service prior to the start of 2018 FIA Formula 1 World Championship season March 25 at the Melbourne Grand Prix in Australia.

Dubbed “F1 TV,” the $8-$12 monthly service will be available in four different languages (English, French, German and Spanish) and available in nearly two dozen markets, including Germany, France, USA, Mexico, Belgium, Austria, Hungary and Latin America.

Access will initially be available on the Internet, with mobile apps and TV apps phased in on Amazon Fire, Apple TV and Android.

Subscribers will be able to view practice, qualifying and races, in addition to press conferences and pre-and post-race interviews. Subs will also be able to watch live races of the main support series, the FIA Formula 2 Championship, GP3 Series and Porsche Supercup, among others.

“We are beginning on the journey to build a cornerstone of our digital transformation,” Frank Arthofer, director of digital and new business, Formula 1, said in a statement.

F1 TV joins a growing market of sport-specific OTT platforms (MLB.tv, NHL.tv, NBA League Pass, MLS Live, etc.) aimed at hardcore fans and attracting new, tech-savvy audiences.

“Our objective … is simple: provide these fans with the best available service to watch live Grands Prix and provide them with the best sports OTT customer experience in the world. Live streaming video is an exciting space changing almost daily,” Arthofer said.

Deloitte: Global SVOD Subs Approaching 400 Million

It’s becoming a subscription streaming media world.

Consulting firm Deloitte suggests 2018 began with about 375 million SVOD subscribers worldwide – a tally projected to increase further as traditional pay-TV operators expand over-the-top video platforms.

By comparison there were about 1 billion pay-TV subscribers globally in 2016, according to Dataxis.

Deloitte predict that 20% of adults in developed countries will have at least five online media (video, music, books, games) subscriptions – increasing to 10 by the end of 2020.

Aggregate spending on digital subscriptions is likely to average over $100 per month by 2020, or over $1,200 annually.

“Audiences, empowered in the digital era, can now consume media content on demand, attend gigs, sporting events or even trade conferences remotely thanks to digital technology,” Dan Ison, partner and head of media and entertainment at Deloitte, said in a statement.

Indeed, Deloitte expects that in mature SVOD markets such as the United States, consumers will soon have access to OTT services catering to specific genres, including drama, comedy, kids, football, hockey, baseball and basketball.

In non-English-speaking markets, Deloitte projects local language content to be created to drive demand. It cited Netflix’s local language productions in Mexico, India, Brazil and Germany. HBO is commissioning local language content, such as the Swedish language comedy, “Gosta,” and Spanish language drama, “Patria”.

“As more local language content is developed, SVOD services will broaden their appeal – and fluency in English … will no longer be necessary,” said the report.

 

FuboTV Adds Showtime

Online sports television service FuboTV Jan. 11 announced the addition of Showtime, the premium pay-TV channel owned by CBS.

Showtime is available for the standard $10.99 monthly fee, and includes access to nine premium channels: Showtime East, Showtime West, Showtime 2, Showtime Showcase, Showtime Extreme, Showtime Beyond, Showtime Next, Showtime Women and Showtime Family.

Showtime series include “Billions,” “The Chi,” “Homeland” and “Shameless,” among others.

Priced at $19.99 (for two months; $39.99 monthly thereafter), FuboTV offers streaming access to more than 65 channels – 37 of which are sports-themed.

Others include HGTV, A&E Network, SYFY, The Weather Channel, Fox News, Fox, CNBC and FX, among others.