The Pandemic Mergers: Our economic shutdown is provoking entertainment consolidation

The Pandemic Mergers: Our economic shutdown is provoking entertainment consolidation

It may be as much about survival as it is opportunism.

It was a wild piece of investment prognostication when in March word was spreading about the possibility of Apple buying the Disney Corporation. It was almost unimaginable, two immense entertainment titans coming together, for possible world domination. The thing is, the onset of the coronavirus economic detonation made it at least imaginable. Disney is a varied corporate enterprise and the normally recommended practice of being diversified was now one that posed a specific threat.

The global shutdown of society meant that Disney saw that closure affected it on many fronts. Movies were not being released nor produced, theme parks were closed, and the cruise lines were locked in ports. This not only meant that revenues were not coming in but salaries and benefits for a huge workforce were being paid. Disney is estimated to be losing $20 million daily from just the closure of theme parks. That is some serious hemorrhaging, but the prospect of an Apple purchase is not realistic. Still, the pandemic has led to this speculative talk, and more is being said.

Like just about every other industry the effects of the coronavirus and the ensuing societal shutdown have presented some unique challenges. Productions have all but ceased, theaters are not operating, and animation has seen a small revolution as much of the work in that field is transitioning to homes, all while there is a burgeoning streaming market as audiences are stuck at home.

It is with little surprise then that some shakeups and major developments are in the works concerning company mergers and other major adjustments. The biggest question around Hollywood is when will movie theaters be back to operations? There is no easy answer, as it is basically a moving target-date. Different states will have reopen orders in varying stages, and once theaters do open there is a likelihood they are mandated to operate at half capacity or less, to allow for distancing. And the enthusiasm of the audiences to congregate is an unknown as well.

It has been reported that the nation’s largest theater chain AMC could be facing tough financial challenges, a direct result of the closures. One industry analyst estimated the company would only be able to withstand having over 650 theaters closed down for about a 4 month stretch. Since screens went dark around mid March that would place the need to open into July. As it happens that is a tentative date that some are looking at as the likely time motion pictures could make a return.

With AMC looking at that deadline there is speculation the chain could be ripe for a takeover. It has been reported that talks have been taking place where Amazon is exploring the possibility of taking over the theater chain. Amazon is one of the few corporations flourishing in this pandemic, both with the heightened reliance on its delivery business and its Prime home streaming service getting more eyes. This raises intrigue for numerous reasons.

Hollywood has had a strained relationship with the streaming services regarding release windows and awards consideration. A newer development has been seen when Universal enjoyed success with ‘’Trolls World Tour’’ the studio declared that new release windows for video on demand was likely to result, at the possible expense of theatrical releases. AMC and Regal Theaters responded to this by declaring they would no longer run Universal titles in their theaters. Would Amazon rescind this policy, given it has a vested interest in VOD revenues?

On the more speculative side there have been whispers that Netflix could be in a position to buy out ViacomCBS. The reason behind this talk is the newly reconstituted conglomerate has been under financial pressure and Netflix is in a prime position for acquisition. When the entities were rejoined last fall Viacom brought over a significant amount of debt. After that affected the stock price it fell further with the shutdown due to the pandemic. That has left the company with a depressed value, and Netflix could be in the market for the library of CBS programming, also that of the various cable networks, and the Paramount library of movies.

The CBS streaming platform has been lagging behind the numerous others which are entering the marketplace. It had hoped the new Star Trek entry would be the big lure for that platform, so that is what has some theorizing that Netflix will be further tempted, in order to retain the rights to that property. ViacomCBS has seen some recovery as the recent quarter reports showed some overperformance, and a price uptick in its stock, so the possibility of the takeover. could be shifting.

One other pandemic deal that is in discussion involves the commuter giant Uber looking to buy out food delivery player GrubHub. Since the outbreak rideshare business has plummeted with so few people going out anymore, all while the doorstep food delivery business has mushroomed. The side venture UberEats has been lagging in the restaurant-delivery sector so eyeing the takeover of the number two business in that field would launch Uber into the top slot, ahead of DoorDash.

It becomes another example of the companies not only adjusting to the tectonic shift in the marketplace but finding ways to survive, and possibly even thrive.

Trending on HotAir Videos

Jazz Shaw 10:01 AM on December 02, 2023