Entertainment media and vertical integration

by

Disney has acquired Marvel for 4 billion dollars. Was it the right price? The market is not sure: the day after the deal the shares of Marvel went up 25% while Disney’s shares felt 3%. Two years ago Disney payed 7 billion dolars for Pixar. The two operations have the same logic: to ensure the access to popular products and formats which can be monetized through several exhibition windows.

Warner has imitated Disney’s strategy: next week it bought DC Comics. Is that just a defensive decision to avoid a strongest position of Disney whitin the media market? Other recent mergers and acquisitions both at international and national levels show a deeper trend in entertainment markets: the coming back of vertical integration.

There is a strong difference between news media companies and entertainment media companies. News are local; even international news should be tailored to local tastes (people need contexts to understand what happend, and what are the facts’ reasons and effects).  By the contrary, entertainment products and brands are international and can be stocked, re-packaged and delivered several times. Therefore, when a corporation has a very good “delivery chain”  it make sense to pay a lot of money for products, brands, rights, characters or ideas which will adequately fill the pipeline.

Disney, Warner, Viacom, News Corp, Sony, Bertelsmann, or Vivendi are able to reach all over the world millions of consumers who want to be entertained. But to be succesful, those corporations need access to the most popular contents. And they will pay for it.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: