Doug Creutz, the media analyst for venerable Wall Street broker Cowen and Company, writes about Rupert Murdoch’s efforts to buy Time Warner, “We generally do not buy the rationale for why this merger would generate significant value.”
We found Creutz’s analysis in The Hollywood Reporter.
Creutz writes: “For instance, the merger of two large studio businesses would not necessarily enhance profitability when both already are significantly profitable. There would likely be a diminution of output, which would benefit rivals much more than the new combined entity.”
The analysis adds: “And there are not any significant benefits from combining the two companies’ sports assets. Both companies’ networks are priced based on the sports they currently carry; a merged company has the same number of networks and the same amount of sports as the two do separately, and we do not believe the cable and satellite operators would suddenly pay more money for the same networks carrying the same content just because the operations were merged.”
Finally, Creutz adds: “[W]e do not buy the argument that content consolidation is necessary due to distributor consolidation. Fox and Time Warner separately both already have a critical mass of must-own content that gives them the upper hand in any negotiation. Big Media currently has a perfect record of being able to negotiate higher rates for content and that likely will not end anytime soon.”
Instead of spending time and energy trying to purchase Time Warner, Creutz has a laundry list of other issues that should be taking up the attention of 21st Century Fox. Number one on his list: “halting the ratings tailspin at the Fox broadcast network.”