Will Ted Turner continue to sling mud at archrival Rupert Murdoch? Will cable stocks ever rebound? Will the megamergers that stole headlines over the last two years gel or start coming unraveled?
The coming year will provide some answers, although analysts, investors and industry executives canvassed for their predictions warn that events in Hollywood often take surprise twists.
Though the entertainment sector took a beating in 1996 as Wall Street worried about high debt levels, pundits say media stocks could bounce back in 1997 as companies that borrowed to bulk up restructure and sell off properties. The investment bankers who sold media companies on the virtues of bigness and "vertical integration" in 1995 are now pushing spinoffs as a way for them to raise additional capital.
News Corp. spun off its Fox Children's Network, sold pieces of Fox's sports and options on its cable news channel this year, and is now trying to find partners--or make a public offering--for its ASkyB satellite service. MCA recently sold its Putnam publishing unit because it was not essential to its core entertainment business. And the trend should continue next year, when analysts predict Viacom will sell radio, Time Warner will shed cable and Westinghouse is scheduled to spin off its industrial businesses.
Outside of selective downsizing, analysts say it is still too early to assess the financial returns of this wave of media conglomerization. But the first clues could appear this year.
Based on interviews with analysts, investors and industry executives, here are a few Company Town predictions for 1997.
Year of the set-top box: A barrage of incompatible digital set-top cable boxes flood the market this year, confusing consumers and stifling the rollout of what is expected to be the cable industry's major defense against satellite services. John Malone, the chairman of Tele-Communications Inc., recently warned fellow cable operators that the industry must back a standardized technology to achieve wide scale.
Replace your VCR: Studios agree with the technology industry on piracy protections for the long-delayed digital videodiscs, allowing Hollywood--eventually--to reap a fortune from re-selling their movies to video stores on the new format. The rollout promised for 1996 may actually begin in 1997.
Ovitz sightings: Former Disney President Michael Ovitz is the subject of 200 news reports emanating from lunches with power brokers in associations with his next venture, about which there will be at least one wild rumor a day.
