The media industry is going through a wave of consolidation as traditional players try to adjust to changing consumer habits. Demand for traditional media like print newspapers, cable TV, magazines, and landline phones, has decreased as streaming, mobile and digital media becomes more popular. As this trend continues, businesses will continue acquiring to capture consumers, build economies of scale and monetize content in order to stay profitable and grow. Here are three interesting transactions in the telecommunications, media and entertainment sector.

AT&T to Acquire Time Warner

AT&T plans to acquire Time Warner for $85 billion in one of the biggest media acquisitions in history. The telecommunications provider is eager to get its hands on Time Warner’s popular channels, such as HBO and CNN, in order to compete with rival Verizon, which recently acquired AOL and is in the process of acquiring Yahoo!. Time Warner plans to sell Atlanta broadcast stations to Meredith Corp in order avoid an antitrust review.

Sprint Acquires a 33% Stake in Tidal

Sprint acquired a 33% stake in Tidal, an online music streaming service owned by rapper Jay Z. By pairing Sprint’s pipeline of mobile phone customers with Tidal’s music and video content, the companies can be more powerful and reach more consumers.

In some ways this deal is a realization of the infamous Time Warner – AOL deal where they tried to leverage AOL’s infrastructure to distribute Time Warner’s content. While that deal is largely considered a failure, times have changed and Sprint and Tidal have a chance to get the integration right. While Time Warner and AOL tried a “merger of equals,” Sprint has acquired a minority investment in Tidal for $200 million.

Hollywood Reporter – Billboard Media Purchases Music Brands from SpinMedia

The Hollywood Reporter-Billboard Media Group will acquire four brands, Spin, Vibe, Steroegum, and Death and Taxes, from SpinMedia in order to establish the largest music brand by digital traffic, social reach and audience share. The Hollywood Reporter – Billboard Media Group’s strategic rationale is to reach millennials and aggressively enter into the video market.

I was recently interviewed about this deal in The Street:

“One of the challenges in today’s media environment is how do you remain relevant, so by combining these business brands and in particular by focusing on the music space, I think strategically the deal makes sense.”

As technology advances and consumer behavior continues to evolve, media companies will continue acquiring in order to stay relevant and most importantly, profitable.

The Street interviewed Capstone CEO David Braun for the article “Hollywood Reporter-Billboard Media Likes Sound of SpinMedia’s Music Brands.”

In the article David Braun analyzes the deal’s strategic rationale and discusses how traditional media businesses can continue to grow amidst a changing environment. As print media declines and digital media consumption rises, traditional publishing and communication companies must find new ways to stay relevant, capture market share and most importantly revenue.

Read the full article on The Street here: Hollywood Reporter-Billboard Media Likes Sound of SpinMedia’s Music Brands.”

AOL has announced it will acquire Adap.tv, a video advertising platform, for $405 million cash and stock. Adap.tv’s proprietary technology allows advertisers to control their video advertising across different media channels, permitting AOL to provide customized advertising based on viewers habits and location.

Internet media companies are targeting video because of higher advertising revenues. Even Facebook, which is primarily a social networking site, will introduce video ads beginning in the fall.

With Adap.tv’s technology, someone watching “Friends” in New York at 3 a.m. may get a different ad than someone watching the same show in Colorado at 6 p.m. We’ve already seen some of this customized video advertising with Hulu and Netflix. Technologies like Adap.tv’s are making advertising more powerful and effective by getting the right ad in front of the right audience.

The AOL-Adap.tv deal is particularly interesting in the context of the Omnicom-Publicis merger that will form the largest advertisement agency in the world.  From an M&A standpoint, media and advertising companies like AOL are in transition and we are seeing major changes in content, delivery and distribution.

The Washington Post and The Boston Globe recently were bought by wealthy individuals, Amazon CEO Jeff Bezos and Red Sox owner John Henry. These papers were once extremely profitable, but now with print media becoming almost obsolete and advertising revenues sinking, traditional newspaper revenues have been cut significantly.

The advertising world is turning upside down. As users consume media on different channels, advertisers must follow. My kids do not watch TV, but they watch lots of video – online and on their phones.  Adap.tv’s technology is important as users move from traditional television to computers to smartphones and tablets. Financial Times reports 38 percent of smartphone owners regularly watch videos on their phones.

In an industry facing disruptions, advertisers must make changes to their existing technology or capabilities or they will struggle to be relevant. Those in any industry who stay on the sidelines will struggle to compete with other players. Companies like Google, Yahoo and AOL are expanding their capabilities through acquisition.

AOL will use Adap.tv to integrate advertising with video content, which AOL has invested heavily in. In 2012, AOL created the first live video channel for the internet, Huff Post Live. (According to AOL’s 2012 Annual Report).

AOL is a huge media advertising company with a wide range of companies, from websites like Huffington Post to AOL’s Sponsored Listings for advertisers. Some of the companies are heavily branded with AOL, such as AOL Mail and AIM, while others like Huffington Post, TechCrunch and Mapquest are branded separately.   It will be interesting to see how AOL will integrate Adap.tv with the rest of the company and how the competition will respond.

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