With consolidation across the media, telecom, and technology industries, Amazon's chance to buy a dynamic content creator will come within the next one year.
Content-based companies like Time Warner and Viacom are too slow to survive in the rapidly changing entertainment industry and will become targets for the cash hoarding technology giants.
Amazon Prime, which grew 17 percent in the first half of 2016, will be Amazon's most valuable asset as the company looks to improve its content base.
It's the last half of the 2016 year, and the mergers and acquisition market looks to be red hot as the presidential election and Fed meeting near. During the week ending October 28th, $177 billion worth of deals were announced. This flurry of activity helped October 2016 set a new monthly M&A record of $249 billion, topping the previous record of $240 billion in July 2015. AT&T and Time Warner were one of the megadeals, worth $85 billion, that helped set the record, but the M&A action within the media, technology, and telecom industries is hardly over.
In fact, Time Warner (NYSE:TWX) and AT&T (NYSE:T) might just be setting the stage for consolidation across the three industries mentioned above. While the megadeal between the telecom and media giants hasn't been confirmed (and might be rejected by the Department of Justice), other deals like Verizon-Yahoo, Comcast-NBC, and AT&T-DirectTV have already precipitated the clash of content and distribution. In late September, talks of a Viacom-CBS merger looked to accelerate the trend of consolidation within the industry, but Viacom's debt-heavy balance sheet has caused CBS to proceed cautiously. Just a couple weeks later, rumors of a buyer for Twitter, a fledgling social network turned distribution service (when a few NFL games were broadcast on the website), conjured up speculation over possible bids from Salesforce and Disney.
Media and telecom firms have shown quite a bit of interest in M&A in order to boost revenue streams and realize synergies through integration of the distribution and content creations segments. Angel investor Jason Calacanis told CNBC in August he thinks that "technology companies are about to enter a golden era of mergers and acquisitions." He believes that "big chip stacks" will cause companies like Google and Apple to take bigger risks in the M&A market. Cash stockpiles sitting idly for too long can make a company look too conservative when it could have taken more risks to achieve better growth. In a competitive industry like technology where investors expect high rates of cash flow reinvestment, a conservative approach can lead to sluggish growth and, eventually, loss of market share.
Source: http://seekingalpha.com/article/4018271-amazon-will-benefit-m-2017