Having Enough Scale…

The big business story this week is only obliquely related to displays, but I thought it was interesting. I’m referring to the deal for Disney to buy Twenty-First Century Fox Inc which will give Disney even more power in the media market and includes the Sky TV business in Europe and India. The combined company will have 272 TV stations globally, although Fox will keep its Fox News and business news divisions.

The interesting point to me in this deal was the rationale, as it has been widely explained by those that track the media market, that the deal was done because Fox, despite its $40 billion turnover, was not likely to be big enough to prosper in the future as the competition will be with the big technology giants including Apple, Facebook, Google and Netflix. It’s hard to imagine Rupert Murdoch actually saying this out loud, but it’s possible as, above all, he’s a very effective businessman.

This change in scale goes back to an inflection point that I first talked about more than ten years ago and mentioned in an editorial in 2006 (Display Monitor Vol 13 #17) that used the phrase “the end of geography for TV”. It seemed to me that the development of broadband delivery of video, that is to say, what we now call OTT video would have a dramatic effect on the TV market. (I quite like another phrase that I used in the same article, in talking about VCRs and PVRs as “the end of the tyranny of time”!).

Netflix, in video, is the key beneficiary at the moment of this trend away from the national to the global, but it’s clear that all of the technology companies that have global scale have the same idea and have had for some time. On the one hand, this development has allowed the development of video content at a scale and with a quality that could barely have been conceived just a few years ago. On the other hand, there is a real threat to the diversity of content that we currently enjoy.

The deal will have an impact in giving Disney a strong controlling interest in the Hulu service as it will have 60% – the 30% it already had as Disney, plus 30% from Fox. How Comcast, which has another 30% (Time Warner has the last 10%) will react is not clear. Will it sell its share to Disney? Or will it stay as a minority partner? I certainly don’t know, but this level of consolidation is likely to send shock waves through other media companies.

Around ten years ago, I gave the keynote at Panasonic’s launch of its VieraCast smart TVs and I remember that afterwards, some executives from a significant broadcaster came to talk to me and ask some questions. I clearly remember them saying that “our board just doesn’t get it”. There may still be some corners of the media world that don’t ‘get it’, but after this deal, there will be that many fewer.


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