MEDIA GROUPS FACE AN UNCERTAIN FUTURE OF CONSOLIDATION OR COMPLETE ANNIHILATION



As we have seen during the past couple of years, the rise of Amazon, Apple and Netflix within the entertainment business has made many media companies anxious of not being able to compete in the long run in an industry with plunging advertising revenues. To stay relevant many telecoms and media companies have begun buying or placing bids on each other to show that size matters (for example AT&T and Time Warner). 

The rise of video streaming from companies such as Netflix, Amazon and Google has taken traditional cable TV by storm, consequently taking large audience numbers and advertising revenues away. Traditional media companies have not been able to transform successfully and certainly not fast enough in a world where the consumption of media has constantly been changing. The question then arises; what kind of deal can traditional media houses be negotiated in a position of balance sheet weakness? The longer they wait in unloading or selling old and rusting parts of their business with negative cashflows, the less likely they are to sell at a high market value.

Looking at the Swedish market, the potential merger (?) of TDC and MTG will give them the size, content and distribution power to take up the fight with large international giants who are progressively interrupting on our Nordic market as well as also reducing their vulnerability. TDC and MTG will be able to dramatically increase their online development making them a real threat to other Scandinavian media houses and tighten the grip on an ever-changing entertainment and media market.

What are your thoughts?

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