Discovery Communications Inc.’s (Nasdaq: DISCA) agreement to buy Scripps Networks Interactive Inc. (Nasdaq: SNI) is a smoke signal for more M&A to occur throughout the media industry, especially as businesses seek direct-to-consumer capabilities through advanced technologies. Talks between Discovery and Scripps Networks has been in the works for several weeks, and now brings together two of the smaller cable network operators with upside potential in digital streaming technologies.
The television sector, from a business model perspective, has been in an uphill battle as the industry has been searching for ways to combat newer technologies as consumers crave to access their favorite TV shows from the palm of their hands. Due to cord-cutters ditching traditional television platforms and looking to watch shows anywhere at any time, media conglomerates have been forced to shift their attention and revenue dollars towards over-the-top (OTT) video resources. OTT technology allows users to access film, television and other media content using the Internet, or mobile-carrier network, without having to subscribe to a traditional cable or pay-TV service.