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Media

As Cable Mergers Loom, Time Warner Should Do This Deal

The rush among media companies to launch over-the-top video services suggests a recognition among old media that the gold mine of cable television is in decline. Less recognized is what that means for the future of the big public entertainment companies, each hugely dependent on cable channel profits.

One answer is consolidation, which typically happens in a declining business as companies endeavor to cut costs as revenues fall. The better answer might be for companies to carve off their cable channels and double down on the part of their businesses that make TV shows and movies, whose value will last.

In that respect, here’s one idea for achieving both: Time Warner could buy Sumner Redstone’s National Amusements, the theater-chain company that owns controlling stakes in both CBS and Viacom.

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Fox CEO Rupert Murdoch is fortunate that the Time Warner deal didn’t come through. The resulting overexposure to cable channels could have been disastrous for the combined company long term.