As Comcast Outbids 21st Century Fox, Sky Becomes Kingmaker for Traditional Media
It is THE blockbuster of the summer. A love triangle of fear, greed and jealousy played against the backdrop of generational successions and the previous masters of the universe competing for limited resources as their empires flail in a changing world.
If it sounds like Netflix’s latest scripted drama you would be wrong, the story in question is the protracted saga of the Sky PLC acquisition. This began in earnest nearly 18 months ago and still shows no signs of slowing down with Comcast having countered yesterday's 21st Century Fox offer with £26 billion. We are effectively witnessing in real time a defining moment in traditional media that will determine who continues to get to play in the era of digital disruption. Those with the rights to major franchises and events will be able to expand those assets into a plethora of revenue opportunities, not least create their own SVOD services to challenge Netflix, while those who miss out are effectively conceding themselves to an inevitable and potentially swift decline.
With big tech’s own designs on the media business, the aftershocks of this acquisition could be larger than anticipated, as this bid of course impacts the ability of the very company that imprinted such narratives on every generation since the thirties: The Walt Disney Company. Disney of course still have many of the assets to offer a direct-to-consumer proposition, but they need to compete in areas Netflix has yet to touch. Disney’s family-friendly manifesto means they is unable to go after some of the more challenging dramatic works that Netflix has produced, nor its plethora of stand-up material such as Dave Chappelle’s specials earlier this year. Where it can win however is sports - one of the last bastions of the pay-TV broadcast model yet to fall to tech. Creating the world’s first mainstream SVOD platform to include premium sports remains up for grabs, though big tech have made tentative steps in the space, and with Disney initially expectant of controlling Sky by way of the 21st century Fox acquisition, Disney losing out to Comcast could have serious implications for its own SVOD offering. If it is unable to build a meaningful proposition, it is not beyond the realms of possibility that the company would become an acquisition target for a big tech company. With Apple’s $257 billion war chest and the intertwined history of the two companies, via Steve Jobs and Pixar, the chasm between Cupertino and Hollywood may become that bit smaller.
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Sky may never regain the mantle that it once was throughout the nineties and 2000s, when through a combination of sports rights and the technology of the time, it was able to lock UK consumers into a higher margin recurring revenue proposition at the centre of their entertainment consumption. However, it now appears to have assumed a less fiscally tangible yet arguably greater mantle; that of kingmaker in the ambivalent future of traditional mass media.