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Data: Yahoo Finance; Chart: Andrew Witherspoon/Axios

The megamerger of Discovery and AT&T media assets is likely to trigger a chain reaction of other media giants forming ever bigger combinations.

Why it matters: There was a time when most Americans got their news and entertainment from three broadcast networks, a handful of Hollywood studios and their local paper. Today, Americans get content from hundreds of different sources, but they're increasingly being gobbled up by the same owners.

Between the lines: In the hours following the announcement of the new media behemoth that includes a combination of WarnerMedia and Discovery, insiders began to speculate which would be the next big deal.

  • "I've got to think that Comcast has a war room in downtown Philly where they're all trying to figure this out," a former WarnerMedia executive tells me. "I wouldn't be at all surprised if we haven't heard the last from (Comcast CEO) Brian Roberts on this thing either," he said, noting that Comcast has a history of injecting itself into deals with higher offers.
  • "Comcast/NBCU and ViacomCBS were already small. They just got smaller," another top media executive said. There's been speculation that the two companies could merge, although they would need to figure out some carve-outs. (Regulation forbids one firm from owning two broadcast networks.)

Be smart: While legacy media companies play hot potato with washed-up cable networks and movie studios, tech giants continue to grow bigger, and rarely by buying up their legacy competitors.

  • Reports surfaced Monday that Amazon is eyeing MGM Studios for $9 billion — pocket change for the tech giant. But such a deal is the exception, not the rule.
  • Tech giants have largely avoided buying media companies to avoid the cultural clashes their telecom competitors have long risked with pricey media deals.
  • AT&T is offloading WarnerMedia less than three years after buying it. Verizon sold AOL and Yahoo for half of the value it purchased it.

Yes, but: With few independent media assets left, the question then becomes how much further will existing media giants need to consolidate to feel like they can adequately compete for the attention of people hooked on streaming.

  • Data shows the average number of services a consumer is willing to subscribe to is just 4, and they are willing to pay on average $40 a month.

What to watch: The WarnerMedia-Discovery deal suggests a new wave of megaconsolidation is upon us, should regulators allow it.

  • Paul Gallant, one of the top media regulatory analysts in D.C., said in a note to clients on Monday: "Warner/Discovery is stepping into an increasingly aggressive and populist Democratic environment, especially on antitrust." 
  • He noted that the WarnerMedia/Discovery deal "could be the DOJ’s first big merger test under Biden, so it carries incremental risk from the DOJ possibly looking to signal a fundamentally new approach to antitrust enforcement."

Go deeper

The age of the à la carte internet

Illustration: Brendan Lynch/Axios

Media that were once free or easily accessible — including news websites, podcasts, TV shows and games — rushed to get behind paywalls during the pandemic.

Why it matters: This accelerating trend is carving the internet into many niche audiences, Balkanizing our collective media diets.

Updated 2 mins ago - Health

The case for Operation Warp Speed 2.0

Illustration: Annelise Capossela/Axios

Omicron's blitz around the world has underscored the need for a new arsenal of COVID vaccines and therapeutics, experts say — and that may require an effort akin to Operation Warp Speed 2.0.

Why it matters: The virus will continue to evolve, potentially in a way that further escapes vaccine protection, and the best way to prevent more global disruptions to everyday life is to have tools ready to combat whatever comes next.

Ina Fried, author of Login
29 mins ago - Technology
Column / Signal Boost

Microsoft's metaverse maneuvering

Illustration: Annelise Capossela/Axios

Microsoft is pitching investors and regulators that its $68 billion Activision Blizzard deal is all about the metaverse, that nebulous buzzword taking the tech world by storm.

What they're saying: By my colleague Stephen Totilo's count, Nadella used the word "metaverse" at least five times in his conference call discussing the deal. Activision Blizzard CEO Bobby Kotick mentioned the metaverse four times, while Microsoft gaming chief Phil Spencer used the term twice.

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