The latest sector to go on a takeover speculation-induced rampage was the media sector.
On Friday the listed media companies gained, with Fairfax (ASX:FXJ) rising by 5.1%, West Australian Newspapers (ASX:WAN) by 6.7%, Austereo (ASX:AEO) by 2.8%, and Southern Cross Broadcasting (ASX:SBC) by 4.2%. Even the big boys, the ones that may be seen as the predators rather than the prey, performed well. The Seven Network (ASX:SEV) added nearly 2%, Publishing & Broadcasting (ASX:PBL) stuck on an extra 4% to its share price and News Corporation (ASX:NWS) gained by 1.7%.
Even the identity “crisied” Telstra (ASX:TLS) gained by 1.3%, perhaps on the belief that it will once again make an attempt to diversify into the media sector from telecommunications and technology. Will Telstra make another tip at Fairfax?
If Telstra is really serious about moving into the media sector wholeheartedly, we would think an acquisition of the Ten Network (ASX:TEN) – currently majority owned by CanWest Global Communications Corp (NYSE:CWG) – would make a whole lot more sense. In the future, the media industry will look very different from how it does today.
The acquisition of Youtube by Google (NASDAQ:GOOG) and the forming of online video rivals by Fox is testament to that. The British Broadcasting Corporation (BBC) has realised that the industry is changing, signing a rights agreement to have its content broadcast on Youtube.
The winner in the global media wars will be those that can command and control visual/video content libraries. Before long, the television landscape will change so that you can either wait for a program to be broadcast on terrestrial television, or download it from the studios directly, or most probably through a portal, such as Youtube.
Your correspondent was rather disparaging about Google’s acquisition of Youtube last year, but perhaps we didn’t appreciate at the time that it is the brand and the technology that Google was buying, not the homemade videos, or scratchy excerpts from TV shows.
Telstra has a big advantage over its potential competitors due to its access to and supply of broadband internet. What it needs, however, is access to content. It currently has partnership arrangements with News Corp and PBL for Foxtel, but if it can take the plunge and buy the Ten Network it would have a far greater impact on the media sector.
Unfortunately for Telstra, we rather think it will choose to proceed with a pointless courting of Fairfax, and miss the opportunity to forge the direction for the next era in home entertainment.
The Daily Reckoning Australia