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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.

Texas abortion law remains in effect after appeals court ruling

Pro- and anti-abortion protesters outside the Supreme Court as arguments begin about the Texas abortion law on Capitol Hill in November. Photo: Jabin Botsford/The Washington Post via Getty Images

A U.S. appeals court transferred a challenge to Texas' law banning most abortions after about six weeks of pregnancy to the state supreme court in a 2-1 vote on Monday evening.

Why it matters: The 5th U.S. Circuit Court of Appeals' decision means the country's most restrictive abortion law can remain in place for the time being.

2 hours ago - World

At least 2 dead after Tonga volcano eruption and tsunami

A satellite image of the explosive eruption of the Hunga Tonga-Hunga Ha'apai volcano on Saturday. Photo: UNICEF/NOAA

At least two people are confirmed to have died in Tonga following the undersea volcanic eruption that sent tsunami waves toward the island nation and across the Pacific over the weekend, officials said Monday.

The big picture: Officials reported major damage along the western coast of the main island of Tongatapu, where the capital, Nuku'alofa, was covered in ash and dust, including on the runway of the airport. A New Zealand Ministry of Foreign Affairs spokesperson told Axios over the phone that two people had been confirmed to have died in the disaster.

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