The media industry is in a frenzy.
Comcast plans to crash that deal with a higher offer. It has also outbid Fox for the remaining 61 percent of European pay-TV provider Sky. Those two deals together could total $100 billion when the bidding is done.
There's been a drastic change among legacy media company executives the last two years. Their CEOs won't say it publicly, but they're saying it privately: The pay-TV bundle, the lifeblood of the U.S. media ecosystem for decades, is dying.
There's a lot of places to blame. Competition on mobile devices. Video games. Even the internet in general.
But executives at most traditional media companies agree that Netflix, if not directly responsible, is at least holding the murder weapon. The 21-year-old company that was once best known for killing DVD rental giant Blockbuster has pivoted its entire business around the idea that streaming video delivered over the internet will replace the linear TV.
Consumers seem to agree. Netflix gained 92 million customers in the last five years while the number of people who pay for cable declines year after year. That dynamic has persuaded investors to believe in Netflix's high-risk business model of running cash-flow negative to outspend traditional media companies for content. It has let Netflix strike deals with everyone from David Letterman to Ryan Murphy to Barack Obama.
And the more Netflix spends, the more investors cheer.
The success of Netflix in the market is why we're seeing "the greatest rearranging of the media industry chessboard in history," according to BTIG media analyst Rich Greenfield.
But chasing scale isn't the answer for every media company, according to Netflix CFO David Wells.
"Not everybody's going to get big," Wells said in an interview. "The strategic question is, 'what type of business do I want to be in the next five or 10 years?'"
So legacy giants are now beginning to contemplate how to beat Netflix at its own game. Comcast, which owns CNBC parent NBCUniversal, has had preliminary talks with AT&T to start an over-the-top digital streaming service with NBCUniversal and Warner Bros. content, according to people familiar with the matter. Discovery is also pondering its own OTT service, potentially with a global technology company, said other sources. Disney is debuting its streaming service next year.
Wells is skeptical about this approach.
"The consumer doesn't want 100 direct-to-consumer services," he said. "The consumer wants great breadth and amazing personalization so they can find something in 30 seconds instead of five minutes."