The massive cable and telecom mergers under review may just be the start of a broader wave of consolidation to hit the entertainment industry.
Rumors are rife that Time Warner is negotiating with Brooklyn-based Vice Media, the magazine-turned-media company now known for producing edgy documentaries that air on HBO. Viacom could rejoin CBS, which it split from nearly a decade ago. Univision may be seeking a buyer and has been in talks with Time Warner and CBS, according to the Wall Street Journal.
Some lawmakers and analysts say it's inevitable that television programmers will bulk up to stand up against demands from increasingly powerful cable and telecom distributors like Comcast who want to lower their costs for programming.
A frequent defense from cable companies for why monthly bills for customers are so high is that the firms have to pay high fees to the likes of ESPN and Viacom in order to carry shows like Monday Night Football and "The Daily Show"; cable companies argue that they need size and leverage to bring those costs down. But programmers like Time Warner and CBS could be looking to bulk up soon, as well, to increase their power at the negotiating table. These media companies are also primed for deals as they scramble to keep up with competition online.
In a Senate Judiciary Committee hearing Tuesday on AT&T's bid for DirecTV, Sen. Amy Klobuchar (D-Minn.) said all these deals should be considered with these bigger trends in mind.
"When discussing the merger, we can't do so in a vacuum," said Klobuchar, who chairs the antitrust subcommittee. She noted that Comcast's bid for Time Warner Cable would also dramatically alter the landscape for video distribution, as will AT&T's proposal to merge with DirecTV.
With fewer distributors of video content, that could prompt content companies -- including broadcast and cable networks -- to bulk up in order to counter the demands by cable and satellite firms to demand lower programming costs.
"The consolidation poses a fundamental question as broadband, video and wireless (converge): what telecom ecosystem will best serve consumers both in the present and in the long term?" Klobuchar said. "What will be the tipping point when it comes to consolidation?"
AT&T CEO Randall Stephenson said in the hearing that his company's $48.5 billion acquisition of satellite provider DirecTV would give it greater power in negotiations with television programmers.
With interest rates still favorable to finance big mergers, the time is ripe for deals in an industry that just a few years ago was quickly moving in the opposition direction, unbundling media properties to reduce costs and streamline businesses. Time Warner, for example, dumped AOL and Time Warner Cable, and more recently has shed Time Inc.
M&A would be a strategically-rational response to increased consolidation in the video distribution space," said Jeffrey Silva, a telecom and media analyst. "The stakes are getting higher where scale and leverage are concerned, seemingly giving rise to an arms race of sorts in the sector."