The last few months have produced a number of historic mega mergers between entertainment giants. Disney, Fox, and now the union between AT&T and Time Warner, Inc have spread billions of dollars between executives and shareholders—but what does this mean for consumers?
The Justice Department has been outspoken in their protest of these mergers, claiming that they will allow for a niche monopoly of content and services. Consumers have already seen a number of, what seem like miniscule, price-hikes in just the last few weeks, and there’s a very good chance that these will continue to raise prices for cord cutters.
With the growing unpopularity of pay-TV and traditional cable providers, most major cable companies realized that they were fighting a losing battle. Prices are out of control and many customers are forking out hundreds of dollars each month for channels that they never even watch. This, combined with the bloated prices for internet services, has lost cable providers business and money.
Creating “skinny bundles” and their own versions of streaming services wasn’t enough to help the big names in cable. As they’ve continued to lose money or to see a downward trend in sales, they’ve started to band together in order to offset their losses—giving birth to the media mega mergers. By joining forces, companies like Comcast, Disney, Spectrum and AT&T now have the power to control more of the content that these streaming services want access to. This type of control combined with the end of net neutrality has created the perfect storm for the “gradual price hike.” This is the subtlest tool used by pay-TV providers that convinces subscribers that a few dollars aren’t anything to worry about. Unfortunately, those price hikes continue in small increments, leading to a big difference over several billing cycles.
According to Joe Williams of the Washington Examiner these mergers may be critical to streaming services like Netflix and Hulu in the coming months. In order to keep giving subscribers access to popular movies and shows produced by other entities, streaming services may need to acquire their own studio rights. These mergers probably won’t be the multi-billion-dollar deals happening at other levels, but they’ll be enough to help them fight back against content price hikes.
“There’s a lot of market experimentation going on, a lot of disruption,” former Federal Communications Member Rob McDowell explained in a recent interview. “We can’t even imagine what other mergers and acquisitions might be coming over the horizon.”
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