Paramount Drama: Platforms vs. Mediums. Plus, How Orientation of An Economy and Industry Impacts Ad Market
Madison and Wall: Saturday Summary for July 6, 2024
For many of the world’s biggest advertising economies, this past week was both slow (because of national holidays) and fast because of major court rulings and elections. Taking a step back from it all, we posted a piece that elaborated on the ways in which societies organize their economies, and the consequences that follow for advertising. Whether or not an economy favors monopolies, oligopolies or “perfect competition” in the parlance of economists can make a big difference for an ad market. Understanding these issues can have real implications in terms of understanding why different categories of marketers behave as they do and how different types of media may or may not be able to catalyze incremental growth.
More tangibly, the only big news of the past week related to the ongoing drama around control of Paramount and its parent company, National Amusements. On Monday came reports that IAC had signed a non-disclosure agreement to look at potentially buying Paramount and concurrently, that Warner Bros. Discovery was interested in merging its streaming service with Paramount+.
The two potential agreements were illustrative, in our view, of two different if not necessarily exclusive pathways, as we noted in our own research on Monday. A combination with a digital media company such as IAC echoed our previously argued views that traditional media companies need to become platforms and partner with digital media companies if they are focused on growing their advertising businesses. By contrast, combining resources with another streamer or video-focused business may drive out some costs in the short-term, but won’t likely change the negatively-oriented secular factors already at play within the industry as it currently organized.
Of course, any choices going forward may be in the hands of Skydance if it does, in fact, proceed with an acquisition, as reports on Tuesday suggested it would. Skydance may very well only focus on the studio business, leaving a lot of room to develop strategic initiatives for the rest of the company. More news will inevitably follow in the coming week given the annual Allen & Co. conference set to take place, and many of the principals involved in transactions likely to be in the same place at the same time.