The ACG New York Tech Media and Telecom Conference on May 24th was full of pull-no-punches panels, acid moments in getting disrupted, and a look at what sort of wonderful chaos lies ahead.
Here are some of the key insights from the panels.
Media: It’s Mayhem Out There
Media is messier and harder to understand than it has been in almost 100 years. No matter what your strategy is, you’re going to need steady nerves and a smart strategy to guide you.
Five Big Takeaways:
- Deal volumes are down: if it gets done, it’s about cost savings.
“Sellers still have a 2015 mindset,” said Jason Sobol, Senior Managing Director, Evercore. “But buyers — whether they’re strategic or financial — are looking at uncertainty in the marketplace and pricing that in.”
Uncertainty exists post-deal, too. Scott Twibell, Managing Director, Lincoln International, asked, “Who is going to be in charge 2-3 years down the road? Too often there’ll be a large buyer and the CFO gets transitioned out (…) and then all you have are the deal dots. You don’t have that personal relationship with someone you transacted with.”
- It’s Fun To Be An Arms Dealer
In a fast-changing environment it’s hard to know which company to buy. Andrew Vogel, Partner, Zelnick Media Capital said buyers often look for an “arms dealer” – a company in the ecosystem who’ll benefit no matter who wins or loses.
For example, as TV production exploded with OTT players like Netflix, Hulu and Amazon, Vogel’s company bet on payroll services. Whether the production was a hit or a flop, the payroll company earned money.
- Kids Rule: The Kermit Imperative
Betting on content? Instead of a “Game of Thrones” clone, think about the kiddies. The biggest driver of customer acquisition and retention for Netflix is kids and family programming. “Why did HBO license Sesame Street?” asked Andrew Vogel. Because as cable bundles come apart and content makers charge consumers directly, they’ll need something kids and parents can’t do without.
To paraphrase an old song by Kermit: “It ain’t easy making green unless you get the kids on your side.”
- Brands and Content: New Ecosystems Are Needed
Red Bull is a genius at content production, and major brands like Pepsi are following suit. Entirely new content production ecosystems will be needed. Kenneth Harrell, Co-founder & Senior Managing Director, Pharus Advisors said, “A brand manager at Proctor Gamble needs to have 2-3 times the size of (her marketing department team to manage) media creation, consumption and engagement.” P.S. New ecosystems are bad news for incumbent ecosystems. Ad holding companies ought to be feeling pretty nervous about the future.
- Unicorn Breeding Is a Hot Topic
In Silicon Valley, a “unicorn” is a tech company that turns into a $1B IPO. New York hasn’t bred a whole lot of those kinds of unicorns but Google and Facebook’s Manhattan outposts may change that. “Backable” employees will leave to start their own companies, and as Jason Sobol colorfully put it, “the valuations beget valuations.” But “not all investors are equally crazy.” VCs need just one big hit. Private Equity needs doubles and triples while avoiding “the doughnut.”
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