Conversations & Insights September 16, 2015

Galloway & Damodaran: Goodbye Verizon, Hello Amazon: Cable Industry Shake Up

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In the second of our video chats with valuation maven Aswath Damodaran, L2's Scott Galloway talks to the NYU Stern finance professor about two recent high-profile acquisitions: Verizon-AOL and Charter-Time Warner. What's behind this drive to consolidate, and do these moves make sense?

For Verizon, whose business is getting lower margin and less profitable, the AOL bid represents the acquisition of an option — if it doesn't work, the company will move on to another option. For Charter and Time Warner, the mega-deal is reflective of an infrastructure shift as technology erodes the cable business.

The macro trend here: Diverse businesses are increasingly going head to head with one another in the entertainment space. Damodaran observes that once-distinct segments are overlapping and shape-shifting so that competition is arising from left field, whether it's Netflix or Amazon and even Apple or Google.

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