With tech behemoths like Amazon, Apple and Netflix investing billions into direct-to-consumer media businesses, the landscape for traditional media companies continues to shift at an ever-increasing pace. M&A activity (e.g. Disney/Fox, AT&T/Time Warner) continues to mark an industry facing major disruption by well funded, powerful new entrants. As reports surface of CBS eyeing an acquisition of Starz from Lionsgate, it’s obvious that this trend will continue.
Media companies are fighting for two things namely. First, scale. And second, more opportunities to beef up direct-to-consumer offerings. With respect to CBS, here’s Cynthia Littleton from Variety:
But Starz is a purely subscription business, something that appeals to CBS as it is less vulnerable to cyclical swings. The collection of 17 Starz- and Encore-branded channels has seen its subscriber base grow to about 25.1 million in the U.S., per Lionsgate’s most recent disclosure, in the past year, thanks largely to the company’s push in launching its standalone streaming app. Lionsgate has also been investing in a global rollout of Starz as a streaming option — something CBS is in the midst of ramping up for its CBS All Access service and Showtime.
Moreover, like Lionsgate, CBS sees Starz as another platform for launching original series that can be monetized through international licensing, or as the building blocks of future subscription offerings outside the U.S.
The Starz catalog can be a boost to the library of CBS. Perhaps the network is looking to beef up the back catalog of CBS All Access (e.g. similar to how Disney has acquired the Fox catalog).
What’s unclear, however, is just how important back catalogs are for present and future streaming options. Yes, they’re nice additions to the service, but is someone really going to tack on another subscription to either CBS All Access or Starz because they can watch the recent Jumanji flick? It’s a reminder that these traditional media are playing catch up and are allocating billions in a desperate attempt to stay relevant in the years ahead.