Risk-averse nets would rather rent than buy
Big media deals can create strange bedfellows. Increasingly, though, there’s something to be said for the commitment-phobic, risk-aversive practice of choosing partners on an ad-hoc basis, as opposed to marrying them.Amid so much uncertainty, in other words, why buy when you can rent? At first glance, CBS’ alliance with Turner Broadcasting to retain basketball’s NCAA Tournament in a whopping 14-year, $10.8-billion rights agreement looks like a simple defensive maneuver. The network needed a teammate, in essence, to fend off the overtures of deep-pocketed ESPN and prevent another broadcast property from migrating entirely to cable. Still, the elaborate arrangement — which calls for the parties to coordinate coverage, share ad revenue and eventually alternate the Final Four — also underscores how two media companies can leverage each other’s assets without necessarily having to reside under the same corporate mantle. It’s telling, too, that this pact involves a subsidiary of Time Warner, which famously went after the big synergy enchilada in the form of the AOL merger, only to have that blow up in its face. For years, there’s been speculation Time Warner would seek another acquisition, one that would yield benefits like a major broadcast network or a news organization partner to help amortize the costs of running CNN, a la NBC News and MSNBC. Both ABC News and CBS News have been mentioned as candidates for such a pairing, and CBS-Warner Bros. are already united in operating the CW network as well. It’s just that after a hard day’s work, they still go home to their respective shareholders. When it comes to the equivalent of living in corporate sin, they’re not alone. The last few years have been characterized by plenty of cooperative ventures among key entertainment players confined to specific areas — conglomerates that often delight in beating the hell out of each other elsewhere. Fox and NBC, for example, teamed on Hulu, but continue to savage each other with the ongoing feud between Fox News Channel (along with News Corp. surrogates) and MSNBC. Disney later joined the online venture, which hasn’t prevented NBC and ABC from trading primetime potshots. Paramount, Lionsgate and MGM found common interest in launching Epix, a movie channel alternative to supplant their output deals with Showtime. ABC/ESPN and TNT, meanwhile, have managed to orchestrate their ongoing coverage of the NBA Playoffs pretty seamlessly. These transactions — some more complicated than others — have obvious advantages. Nobody has to wait around for the FCC approvals that surround any major merger, a la Comcast and NBC Universal. And while certain relationships can raise antitrust concerns, they’re not as ostentatious as having companies formally consolidate control over the marketplace. This all brings to mind the Japanese concept of keiretsu, where groups of affiliated companies work in concert, in theory to their mutual advantage. The late Michael Crichton examined the concept in considerable detail in the book “Rising Sun,” albeit with a mix of admiration and xenophobic contempt. In this context, such associations are considerably more mundane. Indeed, practicality might be the main rationale underlying this approach, given how rapidly the media landscape keeps shifting. Responding to consumer tastes and game-changing technologies requires a crucial attribute — namely, nimbleness — that has repeatedly flummoxed the most grandiose intentions of moguls and merger experts alike. Granted, Hollywood is a town filled with egos, distrust and feuds, where the only thing sweeter than one’s own success is someone else’s failure. Nevertheless, as some of the above deals attest, pragmatism has a way of trumping pettiness — with the added benefit that any conspicuous missteps in forging such partnerships are likely easier to unwind. So taking some liberties with an old adage, why buy the cow when you can share in the milk — or at least its savory byproducts — without having to undergo a protracted regulatory process or undertake crushing debt? If that sounds like a marriage made in corporate heaven, hey, breathe easy, no prenup agreement necessary. It’s really more the equivalent of just shacking up for awhile.
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