Former AOL chief says ‘big money’ will dictate future of media
Industry veteran says disparity in capital will define next big sports rights cycle
The former chief executive of AOL said a new era of “big money media” had begun, in which a disparity in access to capital will determine the industry’s winners and losers.
According to Jon Miller, who navigated media sector upheaval at the turn of the millennium, an influx of cash from tech giants will leave incumbents such as Disney unable to compete for the rights to sports and entertainment.
“Access to capital is now the single biggest factor [of success], not creative talent or programming, which used to be the determinant,” said Miller, a former top lieutenant of Rupert Murdoch and now the chief executive of Integrated Media, an investment group that is a subsidiary of TPG’s venture capital arm.
Miller’s comments come as Apple, Amazon and now Paramount, which he said was “in essence Oracle”, have challenged the dominance of traditional media players.
Paramount, led by chief executive David Ellison and backed by his father, Oracle co-founder Larry Ellison, is vying against Netflix for control of Warner Bros Discovery, the last trophy asset of scale in the Hollywood studio system.
On January 12, Paramount threatened a proxy fight to overhaul the WBD’s board and sued to obtain internal financial information in its latest effort to gatecrash Netflix’s $82.7bn deal to buy the Hollywood giant’s studio and streaming business.
Miller said the economics of the industry began changing decades before this latest dealmaking frenzy — back when Netflix entered the business and used its balance sheet to borrow money and spend it on content, flooding the market with programming.
“What was a relatively level playing field financially began to turn into a stratified field. How much you could spend on programming really mattered,” said Miller. “So it became a financially driven game in a way that it never had been before.”
He argued that the arrival of deep-pocketed technology companies had heightened that divide. “Now, you look, and there are really three or four [companies] who have the financial wherewithal that stand head and shoulders above everyone else.”
That imbalance, he added, would define the next big sports rights cycle: the National Football League’s upcoming media rights auction. “This will create a bidding environment unlike anything we’ve ever seen before.”
While the NFL’s media rights agreements do not have an “opt-out clause” until 2030, commissioner Roger Goodell has signalled the league could begin renegotiating as soon as 2026. As traditional television collapses, the NFL has become the dominant force in US television and is the most expensive American media property.
The league in 2021 signed a media rights deal worth $110bn over 11 years, which included Amazon’s first exclusive broadcasting rights.
Miller was stark about the implication for the traditional media groups. “The incumbents can’t compete as is, either on the programming front or the sports front.”
Disney, Comcast and Fox, he suggested, might ultimately be forced into partnerships or even more radical configurations to stay competitive.
David Ellison, meanwhile, has been moving aggressively to build a media empire. With the ink barely dried on an $8bn deal to buy Paramount this summer, he began making unsolicited bids for WBD.
While Paramount’s market capitalisation is only about $16bn, the group put together a $108bn offer with equity from Middle East sovereign wealth funds, US private equity fund RedBird, Jared Kushner’s investment fund Affinity Partners and the Ellisons themselves.
“I think of it as Oracle but you can call it Paramount if you want,” Miller said of the Ellisons’ deep pockets and capital-raising strategy. “Paramount can decide effectively to bid whatever it wants here.”
While the Ellisons’ approach may seem aggressive, Miller argued it simply reflected the industry’s trajectory.
“I think Netflix fired the starting gun,” he said.