Making sense of media M&A-s

Today's FT pays tribute to The Curse of the Mogul by summarizing global M&A activity in Media since 2009, a particularly disastrous year for the industry. The general point of the article is that - maybe - media firms have learnt a lesson as they seem to be more worried about the efficiency of their core businesses rather than pursuing diversification to build media empires. Is it just the crisis that forced down mogul instincts or will the learning last?

Aereo and Regulation

Usually, I am for the least possible regulation. It is indeed very hard to have good judgment on all trade-offs and, as a result, regulation may do more harm than good. Aereo's new business of streaming free broadcast TV channels to (mobile) Internet devices for a fee is definitely a good illustration of how complex a problem regulation needs to address. Re-transmitting free broadcast TV for a fee is illegal. Cable companies pay a fee to the TV channels. However, Aereo argues that, legally, it does not re-transmit free broadcast TV because it rents an individual antenna to each individual customer. This argument doesn't really make sense and circumvents the regulation with a small technical argument. Will regulators consider the law to the letter or its spirit? They need to come up with a strong decision, which will likely influence in a major way the evolution of the industry. As Aereo expands to over 20 counties (it already covers NYC) there is some urgency.

Music streaming

A few weeks ago The Economist has reported the most recent data about the music industry. The news is good: the bleeding has stopped and digital revenues are finally making up for lost CD sales. What is interesting though is what makes up the mix of digital revenues. The FT reports that while "iTunes-style" downloading still constitutes most of the $5.8 billion digital revenues, the share of streamed services revenues has grown to 20% from about 13% last year. The number of subscribers to these services grew to 20 million, a three-fold increase from two years ago. This is a substantial shift in consumer behavior and great news for Spotify and YouTube who were the fastest growing music streaming services last year. Interestingly they have wildly different business models: subscription-based vs. advertising supported, free service, respectively. If those YouTube videos manage to make it to the Google glasses, the world will definitely change. Quite exciting!