TV content deals are booming

The scramble for television content and who’s controlling it continues to heat up. There were several stories on Monday about deals in the works.

Bloomberg reported in a story by Alex Sherman and Jeffrey McCracken that AT&T is close to acquiring DirecTV in a move that would give AT&T a national satellite-TV provider:

AT&T Inc. (T), joining the ranks of U.S. TV, Internet and wireless providers racing to consolidate, is in advanced talks to acquire DirecTV (DTV) for about $50 billion, according to people familiar with the matter.

Under the plan being discussed, management of DirecTV, the largest U.S. satellite-TV provider, will continue to run the company as a unit of AT&T, said the people, asking not to be named because the information is private. DirecTV Chief Executive Officer Mike White plans to retire after 2015, the people said.

The purchase would give AT&T a national satellite-TV provider to combine with its wireless, phone and high-speed broadband Internet services as competition ramps up. The pool of pay-TV customers is peaking in the U.S. because viewers are increasingly watching video online, and the combination would keep DirecTV from being on its own with just a TV offering and no competitive Internet package.

“With DirecTV they are getting a national TV presence — they can sell TV with wireless nationwide,” said Roger Entner, an analyst with Recon Analytics, based in Dedham, Massachusetts. “AT&T has increasingly been breaking out of their 22-state landline footprint. They sell wireless, they started selling home security and they could add TV to that package.”

The USA Today story by Roger Yu and Mike Snider pointed out some of the other deals that have been negotiated recently as well as how AT&T would integrate the business:

Their negotiation follows a deal struck earlier this year by Comcast to buy Time Warner Cable for about $45 billion, a transaction that would merger the nation’s two largest cable companies.

AT&T offers pay-TV service through its U-Verse brand, but its market reach is limited and DirecTV would broaden its footprint nationally.

AT&T’s U-Verse, which uses fiber optic lines to move data and video traffic, had 11.3 million customers in the first quarter, including 5.7 million TV subscribers. Its revenue from residential customers rose 4.3% to $5.7 billion in the first quarter, the strongest rate of growth since the introduction of U-verse eight years ago.

“To roll out fiber across their (AT&T) entire footprint is hugely expensive,” said Michael Paxton, a cable industry analyst for SNL Kagan. “I don’t expect them to have fiber everywhere. Theoretically, the AT&T-DirecTV linkup would vastly improve their video footprint and as significant as the Comcast-TWC, particularly on video. (The deal) is a response to demand for more video.”

And in other news, Matthew Curtin and Caitlan Reeg wrote for The Wall Street Journal that BSkyB was in talks with Fox about buying assets in Germany and Italy:

British Sky Broadcasting Group PLC said Monday that it had started preliminary discussions with 21st Century Fox over a multibillion-dollar acquisition of its pay-TV assets in Germany and Italy.

In the possible reshuffle of media mogul Rupert Murdoch‘s broadcasting business in Europe, the U.K. company would be taking part in the recent accelerated consolidation of Europe’s cable, television and telecom sectors. Industry executives are looking for cross-border heft in buying rights to show sports and entertainment, and in developing content of their own.

The deal would involve the British company buying 21st Century Fox’s 57% stake in Sky Deutschland AG, an investment valued at about €3.2 billion ($4.4 billion) based on the company’s closing share price Friday. BSkyB would then launch a mandatory takeover offer for the rest.

BSkyB, which itself has a market capitalization of around £13.6 billion ($22.9 billion), said the mandatory offer would be made without a premium. Sky Deutschland shares nevertheless jumped 9.9% in Frankfurt Monday.

The British company would also acquire Sky Italia, a major sports broadcaster in Italy, which is wholly owned by 21st Century Fox.

While all these deals are going on, networks are showcasing what they plan to air next year to court advertisers. The New York Times story by Bill Carter and Stuart Elliot:

NBC and Fox opened the television upfront week for the 2014-15 season with presentations on Monday that were long on new series, long on new strategies, and just long in general.

But a lot of the length of those events had to do with the amount of new programming the networks are looking to sell to advertisers during negotiations that take place ahead of the fall season (hence the term “upfront”). A major reason for the proliferation is a desire to offer viewers new fare 52 weeks a year rather than only during the traditional nine-month season from September through May.

“June is just as important as January,” Kevin Reilly, entertainment chairman of Fox Broadcasting, said as he briefed reporters on his new lineup.

NBC announced 12 new weekly series, five dramas and seven comedies. That does not count the “event shows” — a newish term for a limited-run show or mini-series — that NBC plans to introduce, including “A.D.,” a multipart dramatization of the New Testament, and a live musical version of “Peter Pan” on Dec. 4 that will serve as a follow-up to the hit live musical version of “The Sound of Music” in December 2013.

The common thread in all these stories is how hard companies are working to gather eyeballs and thus advertising revenue. As consuming content on demand and multiple devices becomes the norm, media companies need to adapt and find ways to continue to boost the bottom line.