There has been a flurry of merger and acquisition activity in Europe and the UK recently as incumbent media companies look to insure themselves against the threat of new digital players gaining market share. The latest news is that Comcast has agreed to buy Sky for £29.7 billion, while 21st Century Fox is planning on selling its remaining stake in Sky to Comcast for £11.6 billion. However, the new organisation will need to ensure it retains a close eye on revenue and avoid opaque processes to deliver the best return on investment.
The direction of takeovers is mainly coming from the US as already established broadcasters look to new markets abroad to drive revenues at a time of increasing competition in the media industry. Comcast’s takeover of Sky represents a strategic move to drive new revenues in a UK market with further room for growth and to better access other markets in the rest of Europe. Key to the industry’s success is that the advertising ecosystem that UK media organisations have nurtured for the country isn’t disturbed.
Traditional broadcasters are now changing their approach to better compete with digital media organisations that are taking market share and are able to deliver content directly to consumers when and where they want it. In response, broadcasters are now directly competing with OTT players online, diversifying into new markets both domestically and abroad or looking at new strategic partnerships with other broadcasters. This is creating a diversity of expectation from consumers – some of whom are loyal to the brands of broadcasters they grew up with and others who want all their content delivered on an “on demand” basis.
The UK is forward thinking with its ad inventory, hosted by some of the most innovative media companies in the world. The BBC’s iPlayer was one of the first viable online media players and stood apart for its focus on quality and accessibility which inspired the creators of Netflix to aim higher. Beyond publicly funded organisations, UK media outlets, advertisers and consumers embrace innovation but still manage to find the right balance in the market between compelling content and engaging ad inventory. However, US media companies and UK media companies will need to work together closely to avoid upsetting the apple cart.
According to research we conducted recently with OnePoll, over half of UK consumers are worried about the arrival of US companies to the UK media market and 43% are concerned it will lead to more advertising being shown. In fact, restrictions on the number of ads that can be shown are already in place by regulators such as Ofcom. Beyond that media organisations will have to decide which ads should be shown to which consumers at which times and understand how much revenue they are generating as a result. They don’t want anything to happen that is going to prompt a change in advertising’s engagement or that changes the consumer experience for the worse.
Following an acquisition or merger, UK media professionals will want process to be diligently followed and for sales data and format to seamlessly align. It is in the best interest of all concerned to ensure legacy systems are integrated quickly so that advertisers can best reach audiences across all their properties. Local regulation for each property must also be followed, pertaining to both the types of content that can be shown under local laws and how user data can legitimately be stored and moved.
The opportunity that exists is that, if done correctly, a UK and US media merger could bring about change for the positive. Success for UK and US media companies can be gained by adopting the best approach from each other and maximising the potential of each other’s markets to drive ultimate return on investment. However, this will require complete visibility into workflows and advertising revenue and seamless management across all media properties to unlock their full potential.
Mark Gorman is CEO, Matrix Solutions