Manhattan sports fans watched the World Cup in record numbers, resulting in a significant increase in pay-TV purchases. This was good news for major companies in the process of evaluating potential mergers.
AT&T is looking at a merger with DirectTV. Comcast may join Time Warner Cable. The deciding factors include the lucrative sports fan market. The unprecedented viewership of the World Cup among regular watchers of sports events was not as surprising as the sharp increase in viewers that don’t ordinarily watch sports. Together, the two groups showed the big media players that there are future possibilities for profitability.
The AT&T and DirectTV merger may occur, but only if the cable giant plans to continue with their popular Sunday football games shown at night. Time Warner Cable has been in trouble as rights to sports games become increasingly expensive. Their expenses are, of course, passed along to their customers. When subscribers are unhappy with the rising costs of their TV packages, they tend to drop their media providers as a result. The uptick in live sports mania, however, could boost the pay TV industry as sports fans generally prefer to watch their favorite teams and sports events live rather than watching free versions after the fact. Though TV providers have lost business to companies like Netflix, sports will most likely continue to be watched in real time.
Consolidating businesses into one may make sense as the consumer climate changes. If a business merger seems like a potential solution, most business leaders consult with a business attorney for guidance. Business acquisitions and mergers may help to save a company with numbers lower than desired.
Source: Bloomberg, “World Cup Mania Shows How Sports Is Driving Biggest Mergers“, Alex Sherman, July 02, 2014