The Shift in Media Industry Trends: Mega-Companies and Niche Players

Strategic Insights -

The proposed acquisition of Turner Broadcasting System Inc. by Time Warner Inc. in 1995 signals a significant shift in the media industry, according to Dave Merritt, partner in charge of Strategic Consulting for KPMG Peat Marwick's Information, Communications and Entertainment (ICE) practice. This trend is characterized by the emergence of mega-companies that control both content and distribution channels, as well as niche content producers and distributors serving specialized markets. Merritt highlights that operating in the middle, where companies have moderate content production and limited distribution control, will become increasingly challenging.

Key Takeaways:

  • The media industry is shifting toward a model where mega-companies control both content and distribution channels, while niche players serve highly specialized markets.
  • The proposed Turner/Time Warner merger is complex due to each company's strengths in content and distribution, making it harder to operationalize compared to the Disney/Capital Cities acquisition.
  • Three driving forces are behind this shift: technological changes in distribution, ease of content creation for small players, and escalating marketing and promotional costs favoring mega-players.
  • KPMG's ICE practice, led by Dave Merritt, provides assurance and advisory services to clients in the Information, Communications and Entertainment (ICE) sector.
  • KPMG has 6,000 partners worldwide, with 67,000 professionals servicing clients through 1,100 offices in 134 countries.
  • In the U.S., KPMG offers a wide range of services in five markets: financial services, manufacturing, retailing, and distribution; healthcare and life sciences; information, communications and entertainment; and public services.

Statistics:

  • 134 countries where KPMG has a presence.
  • 1,100 offices globally.
  • 67,000 professionals working for KPMG worldwide.
  • 6,000 partners at KPMG worldwide.
  • 837 cities with KPMG offices worldwide.

Sources:

  • Business Wire, "The proposed acquisition of Turner Broadcasting System Inc. by Time Warner Inc." (Sept. 6, 1995)
  • KPMG, "KPMG's Information, Communications and Entertainment (ICE) practice" (no date)