Consolidation is the future of the media industry, the chief executive of the world’s largest advertising agency told CNBC Thursday.
WPP CEO Martin Sorrell discussed disruptions taking place in the market as major technology companies are putting what he sees as pressure on traditional content producers.
“We’re seeing certain pressures, technological changes in the long-term, and shorter-term pressure, and this is driving consolidation,” Sorrell said.
Amid a number of consolidations taking place or being deliberated, like the recent Comcast bid for U.K. broadcaster Sky or the potential merger of AT&T and Time Warner, Sorrell said that more than anything these developments are evidence of massive changes taking place in media as well as in his own industry of advertising. And many of those disruptions are being led by what he called the “fearsome seven.”
“The pressures that Amazon, Google, Facebook, Microsoft, Netflix, Alibaba, Tencent — the ‘fearsome seven’ if you take the top five companies plus the two Chinese companies — those pressures are causing consolidation,” the CEO described.
“On the content side, companies like Netflix and Amazon can pay significantly higher sums for an hour of content than traditional content producers. And that has created changes in the market, some would say distortions in the market, that are driving this consolidation.”