2019 was kind to GAFA. The four big tech companies entered 2020 with their combined market cap valued by the markets as worth $3.4 trillion, an increase of 31% (or $811 billion) on 2019’s first day of trading.
The media sector began 2020 with a combined valuation of $1.5 trillion, 28% greater than 2019’s level of $1.1 trillion. In spite of this increase, GAFA’s market cap has pulled away from media’s by $493 billion more than at this point last year.
Of the six media and tech companies increasing in value by $50 billion or more in 2019, GAFA companies made up the top four. Two media companies completed the set: Disney is worth $94 billion more (up by 56%), with Disney+’s successful launch a likely catalyst, and AT&T seeing growth of 32% to be worth $69 billion more. Comcast just missed the cut-off point, with an increase in value of $49 billion versus one year ago.
It could be argued it’s a good thing that mega media mergers look to be at an end. The CBS and Viacom merger yielded a new company that’s valued $0.2 billion less than CBS alone was worth entering 2019. Sinclair spent $10 billion on acquiring the Fox RSNs from Disney, but saw an increase in market cap value of only $0.6 billion. Nexstar snapped up Tribune Media in September for $7.2 billion, and saw their value increase by $1.8 billion. New Fox, free of their cable TV, movie studios and Hulu assets, saw their value plunge by 22%, or $6 billion less than the $29.5 billion the company was worth at the beginning of 2019.
It’s important to note that some media companies remain independent, notably A+E Television Networks, Cox and MGM. It’s unlikely however that if they were traded companies, their valuation would dramatically alter the overall story.
With GAFA’s valuation hitting new highs, the major question for 2020 will be if this is the year when one tech company is worth more than the entire valuation for listed media. Based on current trends, it is possible that Amazon, Apple or Google could achieve this.