Content Is A Scale Game
Not unlike building ML models and Large Language Models, content is a scale game. Whether you produce or license content, price tags are high – especially for live sports content such as today’s Super Bowl. It is a good time to own a live sports league as there are many content buyers (traditional media, big tech, alternative asset managers) and few producers.
Lack of scale is the reason why Disney, Warner Brothers Discovery and Fox decided to form a joint venture. Together the three firms can share the cost of content acquisition / licensing, production and distribution. Content acquisition costs are the big expense in this equation. As the cost of content acquisition / licensing moves higher, traditional media companies such as DIS, WBD and FOXA are increasingly at a disadvantage to large Technology companies that play in the media space, each of which has a much larger balance sheet (see table below).
