Talk about a merger between Warner Bros. Discovery (WBD) and Paramount Global (PARA) was reported by Axios this week. What could this mean for future mergers in the streaming world? Brightcove CEO Marc DeBevoise joins Yahoo Finance to discuss.
"From an M&A perspective what you'll see, is not just consolidation... but potentially deconsolidation," DeBevoise says. "A number of these assets probably should be reshaped to be more like to like," such as cable assets being partnered with other cable assets. "I think you're going to see a lot of activity, whether it's bundling, whether it's pieces of the companies coming in and out... you're going to see a lot of change over the next few years," DeBevoise adds.
"I love the idea that... consumers are going to be able to choose their own bundles in the future because people have put together these services in a way that you can sort of mix and match as you go. I think that's the future of where it goes," DeBevoise notes.
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Video Transcript
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SEANA SMITH: Potential merger talks between Warner Bros Discovery and Paramount first reported by Axios. Well, they have started to spark once again, conversation around the future of streaming and if there is some appetite for consolidation. We want to bring in our next guest who says that mergers could be a near-term catalyst for some of the efficiency for cost cuts.
For that, we want to bring in Marc Debevoise. He is the CEO of Brightcove. Marc, it's great to have you back here in studio. Let's talk about the report that we got out earlier this week from Axios, reportedly there Warner Brothers Discovery looking at Paramount, a deal there. Why that deal would make sense for Warner Brothers Discovery, is there a-- is there a strong case for that?
MARC DEBEVOISE: Yeah, look, I think these companies made tremendous efforts, like Herculean efforts to pivot and reshape their companies for streaming. They did a tremendous job driving massive audience, right? 50, 60 million subscribers for each of their services, tremendous, tremendous, positive momentum.
But there was tremendous-- there was big costs that went with that both in content and in infrastructure. And they're realizing now with the downturn in the traditional businesses of box office and cable-- box office and cable, that they really are going to need to find ways to cut those costs. Oftentimes, you see a merger of size that is able to really rip out costs faster and really rapidly right size the size of those companies for those changes that they had to make.
So I think there's some rationale there for really getting those things together, finding ways to cut costs. And then maybe there's a benefit for consumers. By putting multiple services together, do you get the right content mix that can really drive more value for the customer, right, at the price points that they have?
The worry you have though, is some overlap, right? How many subscribers does each service have that may be the same subscriber paying two times for two different things? And you have to really understand the depth between those two services to know if it's a good idea.
BRAD SMITH: And the deals that are potentially on the table for 2024, do you believe they're able to make that argument to regulators that prices for consumers will not go up?
MARC DEBEVOISE: I think they can if they have the right map of those subscribers and the type of content they're going to keep. I think, ultimately, we know there was likely an overinvestment in content in the industry over a few years as they ramped towards this. So there's definitely content spend coming down.
There's also infrastructure costs. Like, one of the things my company does is really help lower those costs for large corporations in streaming. And I think they're all needing to look at those costs and how they're going to be able to make them come down. If they can do that, I think they can hold that price in a good way for consumers and make it really make sense.
BRAD SMITH: Are we just barreling towards a future of bundles? Because I mean, when you think about these types of acquisitions or the mergers that could take place here, it just seems like they're looking across the assets that each player has and saying, this is what we're missing out on, this would help solve that problem.
MARC DEBEVOISE: Look, I love the idea that the consumers are going to be able to choose their own bundles in the future because people have put together these services in a way that you can, sort of, mix and match as you go. I think that's the future of where it goes. But I think from an M&A perspective, what you'll see is not just consolidation where these companies come together, but potentially deconsolidation, right?
A number of these assets probably should be reshaped to be more like to like, right? The cable assets go with cable. The box studios go with studios. The streamers go with streamers instead of conglomerates that have, sort of, a bit of each as those businesses go up and down and have, sort of, traditional or, sort of, legacy decline and, sort of, modern growth businesses.
Those things being together may not make sense over the long run. So I think you're going to see a lot of activity, whether it's bundling, whether it's pieces of the companies coming in and out. I think you're going to see a lot of change over the next few years.
