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Maybe there won’t be a media merger frenzy after all

AT&T is buying everything. Comcast and Disney are going nuts over Fox. But what if the other buyers don’t show up?

left to right: Lachlan Murdoch; executive chairman of News Corp and chairman and CEO of 21st Century Fox Rupert Murdoch; deputy COO of News Corp James Murdoch
The Murdochs are happy to be in the middle of a bidding war. Other media owners may have a harder time finding buyers.
Kevork Djansezian / Getty
Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

Last week’s court decision blessing the AT&T/Time Warner deal gave the entire media industry a green light to kick off a media merger frenzy.

But that doesn’t mean one will happen. So far the only people taking out their checkbooks are the ones who were already taking out their checkbooks. And there is a decent chance that they may be the only ones with a real appetite to buy TV and film companies.

We have seen a flurry of media deals and would-be deals reported and announced in the last week: Comcast* announced a $65 billion bid for much of 21st Century Fox, which Disney topped with a $71 billion bid this morning.

And AT&T, which just spent $85 billion on Time Warner, wants to buy more stuff. It is looking at ad tech company AppNexus for $1.6 billion, and it looks like it will spend hundreds of millions of dollars to buy full control of Otter Media, an internet video joint venture it currently co-owns with The Chernin Group.

But those deals were all in motion before last week’s ruling. The list of other people who want to spend tons of money on content companies remains empty, for now.

Image of the media landscape, updated June 18

One way to think about this is to go company by company. Charter, for instance, is a giant TV and broadband distributor that’s in a position to buy content companies, but Charter boss John Malone says he’s not going to do that.

Verizon, another giant distributor, has looked at media companies in the past, but its current CEO says it no longer wants to buy traditional TV assets; The guy who will take that job this summer is supposedly more interested in wireless broadband than anything else.

Tech companies that have tire-kicked content companies, including Apple and Amazon, have yet to show up.

Caveat: Judge Leon’s ruling blessing megamergers between distributors and content companies is a week old. So things could change. And with rare exceptions, big deals aren’t usually preceded by announcements that a big deal is coming — it just shows up. (And sometimes, people who are buying or selling their companies aren’t entirely forthright about their plans.)

The bigger issue: While there is convincing evidence that media company CEOs and owners think it’s time to get out, it’s less obvious why anyone would want to help them exit.

If the problem with the traditional TV business is that its core revenue streams — selling ads and selling bundled subscriptions — are under threat, why pay a premium for companies built around those concepts?

Here’s a clever way of putting it, from Bernstein analyst Todd Juenger: “We continue to believe that Silicon Valley is not going to pay a multiple on affiliate fees and advertising that they are in the process of destroying. If they want content, they will hire the talent and create it themselves.”

We’re seeing lots of examples of the second sentence: Netflix buying Fox’s and ABC’s best-known content creators, instead of buying Fox and ABC; Amazon getting into the “Lord of the Rings” business; Apple getting into the “Sesame Street” business.

Which explains why the market for people who can make content can be red hot even if the M&A market isn’t. And it will be interesting to see how Endemol, a TV production studio — which makes it a sort of tweener, thematically speaking — will do as it goes on the block.

I still think you’re going to see smaller standalone media companies sell in the nearish future. But I don’t think they’re going to be the subjects of crazy bidding wars like the one Comcast and Disney are waging over Fox. Much more likely: They’ll go to bargain shoppers, or each other, in marriages of convenience or desperation.

* Comcast is an investor in Vox Media, which owns this site.

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