The line between content and distribution is blurring into non-existence, and in the new world order, gaining scale across both categories is mission number one.
Today's top takeover targets are Twitter Inc. and Netflix Inc. (Nasdaq: NFLX) -- Twitter because of its brand, reach and data stores, and Netflix because of its massive audience, content and streaming smarts. On the buyer side, Alphabet Inc. , AT&T Inc. (NYSE: T) and Walt Disney Co. (NYSE: DIS) are said to be in the hunt for new media treasures, along with corporate outlier Salesforce.com Inc. .
The case for a Twitter sale is more definitive than the one for Netflix. Twitter has been struggling financially for years, yet the company still has an engaged -- if not growing -- user base, and it's positioning itself as a vehicle for live media as evidenced by the company's recent broadcasts of National Football League games and political debates. (See By the Numbers – Twitter Streams the NFL.)
Plus, Twitter is sitting on a trove of real-time and historical data about consumer interests and behaviors.
According to The Wall Street Journal, Twitter is actively taking bids for a buyout this week with suitors including Alphabet's Google (Nasdaq: GOOG), Disney and Salesforce. The price for Twitter is estimated at upwards of $20 billion, which would put a serious dent in Salesforce's reserves. Salesforce has a market value of approximately $47 billion, while Disney's market cap sits at almost $150 billion, and Google boasts more than $500 billion in value.
Netflix is the longer shot for an acquisition. Rumors surfaced this week that Disney is interested in buying up the streaming company, but it's unclear whether Netflix is interested in selling, or whether the deal makes sense for Disney. Aside from the issue of cost -- Netflix has a market value of more than $45 billion -- pairing Disney with the online video purveyor could make other programmers more wary of doing distribution deals with Netflix.
There's also the complicating factor that Netflix isn't just a content aggregator and programmer in its own right but also a technology enterprise with major video processing and networking assets. On the one hand, that streaming infrastructure is a big plus. On the other hand, it could prove difficult to integrate with a company that is either new to the market, or one that already has its own streaming operations. Notably, Disney has already invested $1 billion in BAMTech, a spinout of MLBAM . (See Dish, ESPN & the Great Sports Unbundling.)
On the video distribution front, AT&T is also rumored to be looking for new media acquisitions. Bloomberg reports this morning that following the buyout of DirecTV, the telco now wants to bulk up on content. Netflix is not mentioned in the report, but it would certainly fit the bill if AT&T chose to move in that direction. According to Bloomberg sources, AT&T is willing to spend anywhere between $2 billion and $50 billion for content companies.
The latest M&A hype in the media industry follows a cycle of consolidation in the US pay-TV and broadband market. After AT&T, Charter Communications Inc. and Altice closed on their various acquisitions in 2015 and 2016, there was a brief period of quiet while the industry settled into itself. But that period is apparently over, with major players on the hunt again and seemingly recommitting themselves to the mantra: get bigger, or go home.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading