Disney, Comcast to Dominate Global Content Spending, Study Says

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Walt Disney chairman and CEO Bob Iger (left) and Comcast chairman and CEO Brian Roberts

Prior to Comcast's Sky acquisition and Disney's deal for Fox, "Netflix was on course to catch — and overtake — the top Hollywood studios by content spend," says Ampere Analysis. "Netflix would now need to triple spend to achieve this feat."

Media mega-deals have increasingly been designed to strengthen Hollywood companies in the streaming video showdown with the likes of Netflix and Amazon. 

A new study from research firm Ampere Analysis, released Monday, suggests that Comcast after its recent $39 billion acquisition of European pay TV giant Sky and Walt Disney after its $71.3 billion deal for large parts of 21st Century Fox, set to close early in 2019, will dominate global content spending, putting some distance between themselves and Netflix.

The two giants will spend $2 in every $10 on content on a worldwide basis, or 20 percent, compared with 37 percent in the U.S. Disney's content spending will amount to an 11 percent share worldwide and 23 percent in the U.S., while Comcast will account for 9 and 14 percent, respectively, according to Ampere.

Their combined projected content spend of the two merged players will reach $43 billion by the end of 2018, with the combined Disney/Fox, led by chairman and CEO Bob Iger, accounting for $22 billion and Comcast/Sky, led by chairman and CEO Brian Roberts, for the rest. "To put that into context, this is more than the combined outlay of the next 10 largest content spenders in the U.S. — including OTT platforms Netflix and Amazon," Ampere said.

Netflix is expected to spend more than $8 billion on content this year, and the streaming giant has repeatedly said it will continue to ramp up its programming spending. But the newly merged media giants will beat it in terms of content budgets. "Prior to the recent mergers, Netflix was on course to catch — and overtake — the top Hollywood studios by content spend," said Daniel Gadher, analyst at Ampere Analysis. "However, in light of the two new combined entities, Netflix would now need to triple spend to achieve this feat."

The higher combined spending will strengthen both Hollywood giants’ positions in the global market and protect them "against the rising strength of online video," Ampere said. "Each of the two entities controls an increasingly vast library of original content ready to be exploited through direct-to-consumer offers. Disney has already indicated it will stop licensing content to Netflix in favor of its own direct to consumer offer, a service which will have even greater appeal with the addition of Fox assets."

The new giants will also have an impact on independent content producers. "With a shrinking number of content acquirers in the market, the competition for rights will diminish," said Gadher. "And this will inevitably impact the indie sector’s ability to negotiate favorable deals."