Tara Lachapelle is a Bloomberg Gadfly columnist covering deals, Berkshire Hathaway Inc., media and telecommunications. She previously wrote an M&A column for Bloomberg News.

Something's brewing in TV land, and that could be very good news for frustrated investors. 

Apprehensiveness about changing viewing habits has been dragging down shares of the big six providers of entertainment content. In the past 12 months, they've lost more than $60 billion of value. And it's no surprise that the worst performer among them has been Viacom, the owner of MTV, Comedy Central and Nickelodeon whose networks have failed to retain the popularity they once had.

Rough Year
With media entertainment stocks down, calls for mergers and other changes are likely to increase.
Source: Bloomberg

Now, activist investor SpringOwl Asset Management is taking aim at Viacom. Calling the company  "creatively bankrupt,"  the firm is pushing for a total overhaul of Viacom's board as part of a bigger plan it released in a report Tuesday.  That includes removing 92-year-old billionaire chairman Sumner Redstone, who stopped speaking on earnings calls in 2014, and chief executive Philippe Dauman, who was chosen by Redstone to run Viacom after it was separated from CBS a decade ago. 

While the pressure on one media mogul builds, there's a situation involving another billionaire that's festering in the backdrop. Time Warner's stock recently posted a tiny recovery because of speculation that Rupert Murdoch may pursue another bid to merge the $56 billion company with his 21st Century Fox. The idea makes a ton of sense, and it's no secret that Murdoch has had his eyes on Time Warner, which owns HBO, TNT and TBS. Time Warner, led by Jeff Bewkes, rejected an $85-a-share offer in mid-2014, but the stock now trades for around $70. 

Viacom Lags
It's the cheapest stock in the peer group. Disney, which recently released the new "Star Wars" movie, is leading the pack.
Source: Bloomberg

It was only a matter of time before the content side of the television industry would get shaken up. The cable and satellite providers have already been joining forces to combat declining demand for traditional pay-TV packages as people switch over to cheaper or more tailored services over the Internet, such as Netflix, Sling, Hulu and Amazon Prime. The biggest moves were Charter Communications' $79 billion deal for Time Warner Cable (not to be confused with Time Warner, the network owner), and AT&T's $67 billion takeover of DirecTV. Both figures include net debt, and the Charter deal is still pending a regulatory nod.

Now it's the content companies' turn, and there are a variety of ways this could play out. As far as M&A, the two biggest merger scenarios would be Fox buying Time Warner and Viacom recombining with CBS, which owns Showtime and broadcasts "Thursday Night Football." 

The M&A Channel
Media mergers are on the rise, led by pay-TV providers. The network owners could be next.
Source: Bloomberg

Viacom is the weak link, though, so a deal wouldn't be as compelling for CBS shareholders. A decision will be up to Redstone, or when he passes, his family trust. And the interesting thing about that is Dauman, the Viacom CEO, is a member of the trust, whereas CBS chief Les Moonves isn't. 

SpringOwl proposes that Viacom explore a merger with AMC Networks, a $5 billion company, and partner its Paramount Pictures studio with Alibaba or Amazon. Mario Gabelli, whose firm is the largest external investor in Viacom voting stock, also said recently that Viacom should merge with AMC and sell a piece of the Paramount division to Alibaba, which is run by Chinese billionaire Jack Ma and has taken an interest in Hollywood and the movie-studio industry.

Cable providers are beginning to embrace the idea of "skinny bundles," by which subscribers can save money by getting fewer stations, and that's a threat to owners of smaller TV networks that could get left out of such packages. As such, AMC, Scripps Networks Interactive, Starz and Discovery Communications have been at the top of the list of merger candidates. The Scripps portfolio includes HGTV, the Food Network and the Travel Channel, and Starz airs films. In addition to Discovery's namesake channel, it has TLC. 

M&A activity is off to slow start this year, but this industry -- with all its billionaires and personalities -- should have no shortage of excitement. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tara Lachapelle in New York at

To contact the editor responsible for this story:
Beth Williams at