Media Giants' Lack of Big Deals: An Economic and Age-Related Analysis

Strategic Insights -

In a discussion on Bloomberg News in December 2010, John Chachas, founder of Methuselah Capital Advisors, attributed the media industry's lack of big deals to a weak economy and a massive burden of capital expenses. With top six or seven traditional legacy media companies and five digital companies (Google, Apple, Ebay, Amazon) worth around $100 billion, there's an overwhelming pressure on them to spend their capital wisely.

Key Takeaways:

  • The media industry's slow pace of big deals is largely due to the weak economy and the high capital expenses of top media companies.
  • The combined value of the top six or seven traditional legacy media companies and the five digital companies (Google, Apple, Ebay, Amazon) is approximately $100 billion.
  • There's a significant age gap between new media and old media companies, with younger executives at companies like Google and Facebook paving the way for innovative ideas.
  • Legacy media companies are struggling to adapt to changing consumer behavior and new distribution channels, with Netflix's deal with Walt Disney Co. being a prime example.
  • The film business is being remade, with streaming services like Netflix and traditional DVD sales no longer driving growth.
  • The speaking engagements, comments, and statements made by prominent media executives, including Jeff Bewkes of Time Warner and Steve Jobs, highlight the challenges faced by legacy media companies in the digital age.

Statistics:

  • Total value of the top six or seven traditional legacy media companies and the five digital companies (Google, Apple, Ebay, Amazon) is approximately $100 billion.
  • Netflix's deal with Walt Disney Co. makes their content accessible on the Netflix distribution model for the first time.
  • The film business is no longer driven by DVD sales, with growth coming from streaming services and other digital channels.
  • The age gap between new media and old media companies is often cited as a challenge in the industry, with 30-year-old or younger executives leading innovation at companies like Google and Facebook.

Sources:

  • Bloomberg News
  • Methuselah Capital Advisors
  • Google
  • Apple
  • Ebay
  • Amazon
  • Time Warner
  • Walt Disney Co.
  • Netflix