The Medium identifies a few key trends each fiscal quarter that reveal the most important tensions and seismic shifts in the rapidly and dramatically changing media marketplace. The key trends help you answer a simple question: "What's next for media, and where's it all going? How are the pieces lining up for business models to evolve, succeed, or fail?"
Read the three key trends The Medium will be focused on in Q3 2023. This essay focuses on "Legacy media companies are throwing in the towel on their bets to own the consumer relationship in streaming and beyond" and "There is a less-discussed lens on how the demand for 'premium content' is being redefined by creators, tech companies and 10 million emerging advertisers."
One of the most fascinating questions is what the purpose of the media conglomerate model is in the streaming era.
Warner Bros. Discovery is famously the outcome of AT&T having walked away from the media conglomerate model after its $85.4 billion acquisition of Time Warner. In last Thursday's member mailing, I closed with an argument made back in January 2022 by The Wall Street Journal’s Holman W. Jenkins, Jr. that AT&T “could not make the necessary investments in both its telecom and its Hollywood properties while continuing to pay the large dividend that a certain class of AT&T shareholder was expecting.” And therefore:
“it’s hard also to escape a suspicion that AT&T management recognized that new investors would want new managers for new opportunities, not a bunch of telecom veterans. In short, AT&T is proceeding with its chaotic unmerger so AT&T can go back to being a company that the market will let AT&T’s current leaders keep running.”
That suspicion applies equally to all media conglomerates with streaming services: Why isn’t any management team following the sage advice of former Intel CEO Andy Grove and considering the question “If we got kicked out and the board brought in a new CEO, what would he do?”
There are many answers to this question, and I plan for the Member Mailing on Thursday to answer them. In this essay, I'm going to answer the question through the lens of Grove's "strategic inflection point" framework, which he wrote about in "Only The Paranoid Survive."
Management of media conglomerates in the streaming era may think less ambitiously about the post-wholesale future because the still-solid basics of the TV business model incentivize them to. What's the rush to pave the way for new management to take over and reimagine the future?
Total words: 1,300
Total time reading: 5 minutes
One reason the future of the media conglomerate is a hot debate topic now is because of a question on Disney’s FY Q3 2023 earnings call. Michael Nathanson from MoffettNathanson asked Disney CEO Robert Iger:
“…given the thinking you've done about the future of Disney, why does it make ...