A few weeks ago, the nation's top two radio companies inked a deal that people who follow tech probably never even heard about. Clear Channel (CCMO.PK) announced a partnership with Cumulus Media (CMLS). Even though the two compete in local broadcast radio, Clear Channel will include all of Cumulus's stations on its online/mobile iHeart radio application.
It's a stroke of genius by a guy who knows a thing or two about rolling in new media and tech - newish Clear Channel CEO Bob Pittman. In 2011, I argued that terrestrial radio needed to band together, in some fashion, to more effectively compete with companies ranging from Pandora (P) to Sirius XM (SIRI). Heading into 2012, expect to see more of the same, particularly in the broad media space, with big companies hooking up on everything from massive M&A deals to meaty partnerships.
It only makes sense. Consumers no longer need to confine themselves to just one platform to receive all types of content. This new world that Apple's (AAPL) Steve Jobs helped create renders words like "radio" and "television" obsolete. As such, content providers and deliverers should form unified fronts, via M&A, but more so partnerships to take on competitive threats, catalyze and diversify revenues and provide more manageable one-stop shopping for consumers.
From this, I make a natural and logical leap to the rumors surrounding Amazon.com (AMZN) and Research In Motion (RIMM). Before developing this line of thought, a few points:
- We all should have learned this as kids. Just because it's in the paper doesn't mean it's true. While Reuters stands as a well-respected news agency, a report from them that Amazon looked to buy RIM does not make it so. It's only a rumor.
- As a long-term AMZN bull, I do not think the company is in a position to not only make a multi-billion dollar acquisition, but divert attention from current investments to integrate all of RIM's moving parts.
- If I was part of Canadian Parliament, I would move to disassociate my country from RIM as fast as possible. Because that's unlikely to happen, expect the government, particularly the Province of Ontario, to fight off any takeover by a foreign entity.
With that said, an extensive partnership between Amazon and RIM could represent a stroke of genius. Of course, it's likely to be all Jeff Bezos' idea.
Just as Clear Channel and Cumulus are stronger as a unified digital front and Sirius XM would be stronger in a unified front with a younger-skewing company like Pandora, Amazon and RIM could benefit from an association, if carefully executed.
To the unlikely extreme, Amazon could help RIM execute a badly-needed image makeover. Just like Domino's Pizza (DPZ) orchestrated an incredibly gutsy turnaround by effectively dissing itself, Amazon could help RIM do the same for a fraction of the cost of a global ad campaign. Imagine a new RIM smart phone, made exclusively for Amazon, that Amazon aggressively markets as Making BlackBerry Cool Again.
Android provides the platform for smart phones and tablets produced by several companies and offered by practically every wireless carrier and gadget purveyor. RIM's operating systems could become the official platform of Amazon's devices. Or something in that vein. At the very least, RIM could power the rumored Amazon smart phone and maybe future tablet efforts, receiving a hip nod and almost-free publicity at the same time.
Bottom line - don't expect anybody, particularly Amazon, to buy RIM anytime soon. The above-listed factors make a deal highly unlikely, not to mention reluctance from Jim Balsillie and Mike Lazaridis to own up to their ineptness and give up once and for all. In fact, I'm shocked RIMM managed to hold onto its gains through the market's morning hours. Unless something truly inspiring comes out of this rumor soon, expect today's pop to be just another in the growing line of RIMM dead cat bounces ahead of fresh lows.
Disclosure: I am long AAPL, P.