1995 saw more than $40 billion in deals, rumors about virtually every conceivable transaction and some of the biggest executive shifts ever in Hollywood.
Who would have predicted that Ted Turner would agree to sell? Or that Michael Ovitz would leave his perch at Creative Artists Agency to take the job as second-in-command at Walt Disney Co.? And didn't conventional wisdom have it that Japanese companies such as Matsushita Electric Industrial--which divested 80% of MCA Inc. to Seagram Co.--were in it for the long haul?
Based on conversations with dozens of people in the entertainment business, here are some predictions for what 1996 might hold:
1996 will largely be the year of digestion for major players.
Disney is absorbing Capital Cities/ABC Inc. Westinghouse Electric Corp. is absorbing CBS Inc. Seagram continues to absorb MCA. Plenty of management issues and turf boundaries still have to be settled.
Unless Sony Corp. puts its entertainment operations up for sale, don't expect a deal involving a major studio in 1996.
Telecommunications deregulation promises to heat things up in the cable and phone businesses.
What deals do occur in 1996 probably will be telecommunications driven. Phone companies are expanding into distribution, with the possibility of acquisitions of cable properties looming.
One of the more aggressive regional Bell companies like Ameritech Corp. could be first out of the gate. Or maybe Tele-Communications Inc. and Bell Atlantic Corp. could try again to tie the knot if the latter doesn't combine with Nynex Corp. first.
Cable operators just grow bigger.
Companies such as TCI, Time Warner Inc., Continental Cablevision Inc. and Comcast Corp. will continue to cluster their cable systems geographically to position themselves to deliver phone service, swapping subscribers and making acquisitions to fill in holes in their strongholds. They'll offer specials on cable packages to get customers to try their phone services and peddle modems that promise higher-speed links to the Internet than are offered by telephone modems.
The networks become bigger station operators.
Exploiting the high profit margins of the station business, Disney, NBC, and Fox Broadcasting will add to their broadcast groups as ownership limits allow them to reach 35% of all viewers, from the current 25%. Analysts predict that Ronald Perelman could sell the group of Fox affiliates under his New World Communications banner to Rupert Murdoch. For the right price, Barry Diller could flip the four Fox affiliates he picked up in his purchase of Savoy Pictures Entertainment back to Fox. Independent station operators like Tribune Co., Chris-Craft Industries Inc. and Renaissance Communications will eat smaller operators or be eaten themselves. Even UHF stations and stations in small markets could fetch high prices.
Time Warner's pending acquisition of Turner looks ever more iffy.
Federal antitrust questions, unhappy shareholders, a litigious phone partner, a Time Warner stock that remains stuck below $40 a share, and a feeling in the air that TCI's John Malone got the deal of the century. Federal regulators are unlikely to stand for the top two cable operators sleeping in the same bed. But it's hard to imagine Malone being bought out of the deal or Time Warner Chairman Gerald Levin giving up his cable dream and selling off the wires to his partner US West Communications Inc. or even to AT&T Corp.
Either way, the high-fives between Levin and Ted Turner may have been premature. If the Time Warner-Turner Broadcasting System Inc. deal falters, Levin's in trouble.
And it does unravel, expect General Electric Co.'s NBC to take another shot at acquiring Turner. Combining NBC's news operations with Cable News Network could produce $100 million in savings.
Don't expect a quick decision out of Sony on whether it will ultimately divest its entertainment units.
The company is at a crossroads over whether again to hire a new management team, or forget about trying to link hardware and "software."
Odds are better than ever it will follow Matsushita's lead and go back to its core electronics business, but don't count on anything happening soon. The company moved glacially in shaking up its studio, and finally ousting Sony Corp. of America Chief Executive Michael P. Schulhof.
Westinghouse will make a move into cable.
Eyeing the global opportunities, dual revenue streams and its competitive void in that arena, the industrial company will make a run for Gaylord Entertainment Co., the owner of two CBS affiliate stations, the Opryland hotel, the Country Music Television and The Nashville Network cable channels. Although other suitors have their eye on Gaylord, Group W has an edge through its agreement to market and distribute the two cable channels. Meanwhile, despite Westinghouse's claim not to need a partner to run CBS, some analysts predict a change of heart before year-end. If advertising turns down, Westinghouse could be in serious trouble.