No Longer Trending, Legacy Media Balks at Bidding for TikTok

The contestants in Washington’s long-running game show are now known, we think. They’re vying for what’s been behind Door No. 1 for the past 90 days: TikTok.

After extending the sale-or-ban deadline for TikTok earlier this year, the ByteDance-owned social media platform is once again up against a deadline, which is this Saturday. Rumors have swirled of likely buyers all week — Oracle, Amazon, Andreessen Horowitz, or possibly some consortium of backers — and the VEEP has said an announcement could come as soon as today.

But a few names have been noticeably absent from the entire process: legacy media players like Disney, Comcast, Paramount and Warner Bros. Discovery. So why did the old guard — desperate for a way into the modern world of user-generated content — refuse to throw its proverbial mouse-eared hat in the ring? This might rank as the media industry’s biggest missed opportunity of the decade. 

Roll the Credits

The idea of legacy media buying into social media isn’t new. In his 2019 memoir, Disney CEO and M&A king Bob Iger revealed an acquisition of Twitter in 2016 was approved by both companies’ boards, until Disney walked away at the last minute. These days, whiffing on social media seems to be haunting the industry. YouTube has taken over living room TV screens. And last week, Deloitte published a new study confirming what everyone already knew: 56% of Gen Z and 43% of millennials find user-generated social media content “more relevant than traditional TV shows and movies.” 

It’s the type of data that can spur an identity crisis; Disney is now reportedly planning to add a user-generated content feature to its standalone ESPN streaming service, due to launch later this year. But just two decades ago, the crisis of Netflix spurred Disney, Fox, and NBCUniversal to launch Hulu as a joint venture. This time around, debt acquired from the Streaming Wars arms race (Disney, for example, purchased 21st Century Fox for $80 billion in 2019, which looks like a massive overpay compared with TikTok’s rumored $100 billion valuation), may cause legacy players to miss out — likely to their own detriment:

• “TikTok has completely changed the way people consume content, making it a major competitor to traditional media platforms,” Christena Garduno, CEO of performance marketing firm Media Culture, told The Daily Upside. “If a media giant had formed a joint venture… they could have collectively maintained some level of control in the creator economy rather than being left on the sidelines.”
• “I think many [legacy media companies] are challenged,” Wedbush Securities analyst Michael Pachter told The Daily Upside. “And others are afraid. Nobody wants to make an expensive mistake. Big Tech is bidding and will win.”

One caveat: Paramount may end up allied with TikTok anyhow. It’s soon to be owned by SkyDance Media, which just so happens to be majority-owned by Larry Ellison, the founder of leading TikTok bidder Oracle.

I Fought the Law: It’s true that legacy media companies wouldn’t have been shoo-ins to win TikTok. The president, who is taking a hands-on approach to facilitating a suitable TikTok sale, has been engaged in protracted legal fights with the news organizations owned by legacy media players. Which means even if they had wanted to make a bid, they likely wouldn’t have been the White House’s top pick.