Big Media Companies Buy Digital Startups in Bid to Stay Competitive – Variety

Big entertainment and media deals such as AT&T’s acquisition of Time Warner and Comcast’s purchase of DreamWorks Animation are the ones that steal the headlines, but many smaller pacts are equally significant and, in some ways, more critical to the survival of the giant legacy conglomerates.

These less-visible deals involve the snapping up of small- and medium-sized companies as the major players look to beef up their savvy in such non-legacy areas as digital media and streaming, to nab bright execs at promising startups, to get an insider’s view of the fast-moving digital business, and to minimize the danger of being left behind in a world of disruption.

“They’re trying to get ahead of the curve and there’s pressure to get into new technologies,” says veteran media analyst Hal Vogel, CEO of Vogel Capital Management. “It’s important to take risks and experiment.”

For example, a key motive for Verizon’s acquisition last year of tech startup Vessel was to bring aboard executive talent. “In specific instances, we may do a small transaction just to get the people,” says Verizon senior VP-corporate development John Doherty. He also chairs Verizon Ventures.

In other instances, dealmaking aims to corral business capabilities that plug gaps for the big buyers. For example, research companies that track consumers and foster fan engagement are being gobbled up by music labels and other big music outfits to build in-house analytic smarts.


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