One of last week's biggest news stories was the court approval and subsequent closing of the AT&T and Time Warner acquisition. The results were the indirect catalyst for another big news item: In the wake of the victory in the highly watched antitrust case, Comcast then made a formal bid for the assets of Twenty-First Century Fox, topping a previous offer made by Disney (NYSE:DIS), only to be followed by a new bid from the House of Mouse.

A driving factor behind the increasing consolidation in the big-media space is the unrivaled success of streaming pioneer Netflix (NASDAQ:NFLX), which has led to the acceleration of cord-cutting and the decreasing relevance of both linear and cable TV.

With these big-media companies entering into marriages of convenience and maneuvering to outbid one another, you might be tempted to think that these mergers are a slam dunk to slow the rise of Netflix. That, however, may not be the case.

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A refresher

For those wondering why the merger mania is playing out, the Netflix model proved that consumers were no longer content to watch their favorite programs on time schedules dictated by over-the-air television and cable channels. Netflix also demonstrated that creating the content and managing its distribution gave the company better control of its own fortunes.

Netflix has said that owning the television series and movies it provides to customers is less expensive on a per-subscriber basis. That, combined with its cutting-edge algorithms and unparalleled data cache, has grown the company's worldwide viewer base to 125 million subscribers and ratcheted up its financial results. The company grew revenue more than 40% year over year in its most recent quarter, increased its operating margins by 25%, and grew its earnings per share by 60% compared to the prior-year quarter. 

Monkey see, monkey do

Legacy media companies are looking to expand beyond their time slots and dependence on others for distribution. Comcast made its first foray into this new model by acquiring NBC Universal, gaining the NBC television networks and Universal Studios, which added content generation to its cable distribution systems. AT&T has taken the same approach with its acquisition of Time Warner, adding the company's movie and television studios to its DirecTV and wireless distribution systems. Meanwhile, Disney and Comcast continue to battle it out to see which will ultimately gain control of Fox.

The urgency to both control and distribute content has escalated in recent years, driven by a number of developments. Alphabet's YouTube boasts over 1 billion hours of video watched daily, Amazon's Prime has more than 100 million subscribers, and Apple is rumored to be launching a streaming video service next year. When you add to these Netflix's growing dominance in the streaming space, it's easy to see why old media sees consolidation as its last, best option.

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Image source: Getty Images.

Their best option might not be the best option

Netflix already commands a dominant position in the U.S., with an estimated 50% penetration, and was able to accomplish this feat despite well-heeled competitors like Amazon and Apple having designs on its lead. Netflix was able to parlay its first-mover advantage, its treasure trove of viewer data, and its industry-leading user interface into the lead in the worldwide streaming market.

The problem with big media's assessment of the situation is that younger viewers are no longer tied to their television sets the way previous generations were. With a host of options available via the internet, the youngest viewers are less likely to participate in the declining paradigm. While I don't see linear or cable TV disappearing anytime soon, its relevance is fading for a growing portion of the population.

Netflix will continue to rule the roost

In a note to clients, analysts from Guggenheim gave a nod to Netflix. "It is more likely that Netflix will further surprise and delight customers with incremental functionality and experiences (like set-top-box partnerships and gaming) than it is that incumbent media companies will return to share gains in audience levels." They went on the say investors should be more concerned about Netflix's ability to "increase customer engagement and subscriber growth... than a perceived threat from legacy media consolidation."

Each of the legacy media companies mentioned above believes that the combination of content and distribution will be the magic bullet that keeps them relevant. While it may slow or arrest their decline, the big-media companies of old will continue to be replaced by the emerging paradigm of internet delivered content -- and they will likely never achieve their former dominance.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Alphabet (A shares), Amazon, Apple, Netflix, and Walt Disney and has the following options: long January 2019 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Netflix, and Walt Disney. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.