With the extension of nine years that Disney (NYSE:DIS)  and Time Warner’s (NYSE:TWX) have signed and agreed for their ESPN and Turner Sports to keep NBA on ABC, ESPN and TNT, The New York Times reported the deal to total around $24 billion. This makes around $2.67 billion each year for the companies.

Analysts were shocked by the heavy price tag with the deal as it costs companies around $930 each year. This may be bad news for sports junkies as cable bills will run high.

It’s obvious how much money TNT and ESPN along with other media networks make. ESPN generates content either internally or purchases it from other sources. Hence its costs are from partnership agreements or the creation of original content.

The two media networks in turn gain revenue from cable providers broadcasting their shows who in turn make revenue from advertising. The amount of revenue that Time Warner (NYSE:TWX) and Disney (NYSE:DIS) made in the previous fiscal year was 49% and 49.2% respectively.

Cable customers have to pay nearly $1.44 and $6.04 per month for TNT and ESPN respectively according to SNL Kagan, the research firm. The current deal included 52% paid by Disney (NYSE:DIS) and the remaining 48% paid by TNT. To keep gross margins whole, Disney (NYSE:DIS) will have to increase the affiliate fees up to around 7.1%. On the other hand TNT will have to go up by nearly 9.6%. Keeping all this in mind with a dollar basis, there will be an increase of nearly $0.43 as well as $0.14 each month. Another alternative for this can be $0.57 per month.

These costs usually were passed on to cable providers who in turn increase the rates that they provided to customers. However, cable providers are trying to avoid this now. This is the new trend with pay TV that makes consumers pay nothing for TV. The use of Netflix (NASDAQ:NFLX) and Hulu has increased from 4.5% in U.S. households in the year 2010 to around 6.5% today which is about a 60% increase.

Still, Pay TV isn’t doing too well however, as it reported a subscriber drop the first time last year. The industry is most likely to underperform unless and until it doesn’t offer consumers the option to decrease channels they do not want to watch. The current NBA deal is one good example referring to how the business of pay-TV is unsustainable. Customers aren’t happy and neither are they are looking for ways to fulfill their craving of good TV in the busy hectic lifestyles they lead.

Cable is definitely going away but in order to profit from it, cable if grabbing the $2.2 trillion. As cable declines, companies will surely benefit. Three companies are going to take the lead as this happens: Google (NASDAQ:GOOGL), Apple (NASDAQ:AAPL) and Netflix (NASDAQ:NFLX). Now all we have to do is to wait and see how the market reacts to these cable providers (as if we don’t already know).

Time Warner Inc (NYSE:TWX) is confident that it will perform positively even in the standalone times; the company has planned its restructure strategy to improve its growth and numbers.

According to the people familiar with the matter, the company sent a memo to its employees stating that the main focus of the company will be on cost cutting strategies. The company also plans to invest more in its core areas in order to improve the profitability.

Sources have it that in addition to the buyout that the company plans to offer to its employees, Time Warner Inc (NYSE:TWX) is also planning on some more layoffs.

The company is focusing more on the restructuring of its Turner Broadcasting Division, for the revenues derived from TBD have fallen considerably over the last couple of quarters due to the decreased ratings, severe competition and poor advertising trends.

The company announced its initiative of streamlining, commonly known as the Turner 2020, back in June 2014; and all the latest efforts by the company are measures to launch this initiative properly and successfully.

The Turner 2020 initiative is a plan designed by the company to target the struggling segments of its divisions and make them the competent ones by improving the qualities of the programs broadcasted by these segments as well as content monetization.

Talking about the layoff offers, the employees that have ages of 55 year+ together with an experience of at least 10 years in the Time Warner Inc (NYSE:TWX) will be offered buyouts. The buyouts will cover several divisions, including Cartoon Network, TBS, TNT, TruTV and CNN.

According to the market analysts, the layoffs were unavoidable, and a number of company’s employees were expecting the company to announce the layoff plan in the year 2014. Jeff Zucker, the chief at CNN, also reiterated this point during a meeting with the employees last week.

Turner division has almost 13,000 employees.

The company had been planning its restructuring strategies for quite some time now, in order to improve its revenues and cut down the costs. The company recently spun off its magazine segment and made it into a whole new publicly traded corporation.

Time Warner Inc (NYSE:TWX) currently has a #3 Zacks rank on its stocks with a consensus rating of ‘Hold’.

The company, on the last trading day, August 27, 2014, started its stocks at a price of $76.88 and closed at a price of $76.85, after hitting the highest figures of $77.26. The company has a total market capitalization of $65.81 billion with a price to earnings ratio of 16.62. As far as the dividend yield of the company’s stocks is concerned, the numbers are recorded to be around 1.65 percent.

While the companies are still both in the discussion phase of the dispute, Amazon has already removed the preorder option from its website for DVDs and Blu-ray discs of certain Disney Movies, including “Captain America: The Winter Solstice” and “Muppets Most Wanted.”

As for Disney movies that were released prior to this dispute, their sales have not been affected. Disney books, toys, and other branded merchandise have not been affected either.

These issues in question are reminiscent of those that were brought up during a heated contract renewal in the spring between Amazon and Time Warner Inc (NASDAQ: TWX)’s auxiliary company, Warner Bros.

One of the most pressing issues for Amazon is that brick and motor stores like Wal-Mart Stores Inc (NYSE: WMT) and Best Buy Co (NYSE: BBY) often cut their prices on new discs so that they are lower than wholesale prices in order to attract customers into the store, where they will hopefully purchase additional, more profitable products. Amazon does not benefit from these price markdowns, because it cannot take the benefits of drawing customers into a physical store to display and show the products.

According to people familiar with the situation, Amazon has tried to solve this pricing problem by asking studios to cover the losses in these situations.

In the past, the online retailer has participated in heated negotiations with Hollywood film studios, but it has never prevented the ability to allow customers to preorder the discs until the recent argument with Time Warner’s Warner Bros.

Amazon also faces greater pressure to increase profitability after its lackluster second quarter, which dragged down its stock price last month. The retail giant posted unexpected losses of $126 million, even though its revenue jumped 23%. Amazon also expects more trouble ahead – it estimated an $810 million operating loss for the current quarter.

Amazon’s dispute with Warner Bros was settled within a couple weeks. No one can be sure how long the fight with Disney will continue, but both firms have shown that they do not sway easily in conflicts in the industry.

Amazon is also concurrently dealing with a dispute with Lagardere SCA (ETR: MMB), a book publishing company. The dispute has lasted four months so far. Amazon pushes for the French company to price their e-books at $9.99, saying that the lower price will attract more sales and increase revenue for the industry. The retailer plans to discuss e-book pricing deals with other publishing companies later this year.

Disney has also been engaging in a dispute with Outerwall Inc (NASDAQ: OUTR)’s Redbox since June of 2012. Redbox provides movie and video game rental services. The dispute is regarding the amount of time customers should wait after a film’s DVD release to rent discs from the kiosks. Disney wants to instill a wait time of 28 days after the DVD’s go on sale, which is the same policy as three other major Hollywood studios. It is widely agreed upon in the film industry that this policy encourages consumers to purchase the actual DVD rather than the $1.20 per night rental discs.

Redbox has refused to accept Disney’s policy, arguing that the family movies coming from Disney are especially valuable to its main customer base. Since the dispute has started, Redbox has purchased Disney’s movie discs directly from other suppliers and retailers, and used those DVD’s to rent out. After two years of discussions, neither company has given an inch.

A statement released by Twenty First Century Fox said that they have decided to drop the $80 billion bid after Time Warner refused to engage with them. Instead, Twenty First Century Fox will buy back $6 billion of its own shares.

This announcement was made right before the stock market closed on the day before it would release its quarterly earnings report.

Murdoch said in a statement that the company has seen the merger with Time Warner has a unique opportunity to bring together two companies with celebrated content brands. He claimed that Twenty First Century Fox’s proposal contained meaningful strategic value and compelling financial justification. He also stated that the company’s approach towards Time Warner has always been friendly.

However, the executive and management board of Time Warner has consistently refused to engage with Murdoch’s company and discuss an offer that was, according to Murdoch, extremely appealing. Additionally, Murdoch blames the way Twenty First Century Fox’s stock price reacted since the offer was announced, saying that the company’s share price was undervalued and made the deal unappealing to many of Fox’s shareholders.

These factors, along with Murdoch’s commitment to be restrained in their approach to the merger and its priority of providing value for the company’s shareholders, has lead to Murdoch dropping the bid.

Fox first announced its bid for Time Warner in July. This offer was quickly dismissed by Jeff Bewkes, the chief executive officer of Time Warner, who claimed that the offer undervalued the company. Time Warner has a large collection of assets, including HBO, CNN, and Time Warner movie studios. According to Bewkes, the biggest turnoff for Fox was the company’s dual class setup, which gives Murdoch the majority control even though he is a minority shareholder. Bewkes sees that as a regulatory risk, and doubts Fox’s ability to manage a merged company of this size.

Analysts estimated that Fox would have to pay up to $100 billion to secure this deal. Other players in the Silicon Valley giants like Google Inc (NASDAQ: GOOG) and Apple Inc (NASDAQ: AAPL) could potentially get involved and spark a bidding war.

This bid was Murdoch’s largest venture ever, and it follows the hacking scandal of The News of the World, Murdoch’s newspaper in the United Kingdom, which led to the shut down of his most profitable newspaper, the arrest and conviction of his senior staff, and a tarnished reputation.

A media analyst at BTIG stated that the withdrawal of the deal was surprising, and it made sense to go through with the deal. Some said that a combined company would have an advantage when negotiating with other larger cable firms.

Comcast (NASDAQ: CMST) is in the process of finalizing an offer to take over Time Warner Cable. Comcast is the number one largest cable firm in the United States, and Time Warner Cable is the nation’s second largest and a former branch of Time Warner.

This deal also had personal merit for Rupert Murdoch, who had planned to put his son, James Murdoch in a key position within the merged company. This move was to salvage James’s career, which was all but completely ruined as a result of the hacking incident.

Claire Enders, the founder of media research company Enders Analysis, stated that the deal would propel James’s career into new extraordinary heights because of the scale of the deal as well as the reputation that would likely follow him for the rest of his career.

While Fox has withdrawn its offer, analysts say that this is not the end of Fox’s pursuit of Time Warner. According to David Folkenflik of NPR, this move is just another way to pressure Time Warner.

S&P 500’s Index fell by 0.3% to 1,907.6. This fall negated the earlier gain of 0.3%. The benchmark index reduced by 1% and attained its lowest value since May. Dow Jones Industrial Average also met with a decrease. It fell by 50 points, which is equivalent to 0.3%, and arrived at 16,316 today. Richard Hunter, the equities head at Hargreaves Lansdown Plc, said that because of increased sanctions against Russia, the investors are becoming more concerned.

Alexander Vershbow, NATO Deputy Secretary General, claimed that Russia has increased its troops by 20,000 along the eastern borders of Ukraine. Radoslaw Sikorski, Polish Foreign Minister, said that this increase of troops along the borders may become an invasion. Vladimir Putin, the President of Russia, is not intending to back off from Ukraine. After the European Union and U.S. tightened the sanctions in the previous week, Russia will propose retaliatory measures.

Ralph Lauren Corp. (NYSE:RL) and Time Warner (NYSE:TWX) are included in the 25 companies in S&P 500 that will be reporting earnings today. 76 percent of the companies who posted their results have crossed the estimates of analysts. In the second quarter, profit was increased by about 9.4%. Sales increased by about 4.2 percent. Sprint Corp. (NYSE:S) decreased by 17% and closed at $6.04. The regulatory concerns all over have affected the possible benefits that could be gained from the merger of T-Mobile US and Sprint Corp. (NYSE:S). The merger would have combined the fourth and third-largest companies in U.S. with wireless carriers.

Groupon Inc. (NASDAQ:GRPN) decreased to $5.85. The company posted earnings of 2 cents per share in the third quarter, while the analysts had predicted 3 cents for a share. In the second quarter, the company reported 1 cent EPS. The company’s sales increased by $752 million which is below its average of $762 million. Time Warner (NYSE:TWX) fell by 12% and ended up at $75.25 after Murdoch Fox withdrew its offer of $75 billion. Time Warner (NYSE:TWX)’s board refused to join in talks with Murdoch Fox. So Fox, the billionaire chairman, finally gave up. Fox’s stock price fell by 11% ever since the offer was publicly proclaimed.

Enphase Energy Inc. (NASDAQ:ENPH) increased by 12% and closed at $10.83. The company estimated its earnings for the third quarter between about $93 million and $98 million. The average estimate of the analysts is much lower – about $78.3 million.

This deal is the latest indication of consolidation in the media industry in Euope. British Sky Broadcasting Group is owned 39% by Robert Murdoch, the owner of Twenty-First Century Fox.

Recently, Twenty-First Century Fox offered $80 billion to Time Warner (NASDAQ: TWX). Time Warner rejected this offer.

By selling its European assets, Twenty-First Century Fox could provide the American broadcasting compay with the additional financial power that it needs to make another increased offer for to purchase Time Warner, as Murdoch has expressed his determination and desire to purchase the media company.

In the deal with British Sky Broadcasting Group, Twenty-First Century Fox keeps its 39% minority stake in the British broadcasting group. This move allows Twenty-First Century Fox to keep an advantageous position to gain from any deals to be made in the future that involve consolidation in the telecom and media industries in Europe. Industry leaders like Liberty Global, the cable company owned by John C. Malone, are planning to offer pay-television content to their customers in the area.

For British Sky Broadcasting, one of the largest pay-television providers in Europe, this deal enables the company to expand its influence in the area. If the deal actually goes through, Twenty-First Century Fox’s Italian and German assets would give British Sky Broadcasting the ability to offer premium movie and sports services to about 20 million users in regions from Italy to Ireland. The company already has well-paying deals with European sports leagues, including the English Premier Soccer League.

British Sky Broadcasting’s chief executive, Jeremy Darroch, expressed his optimism about the deal, stating that the company will without question be stronger after merging with Twenty-First Century Fox. The acquisition will bring good news for both investors and customers.

The deal still awaits approval from British Sky Broadcasting’s minority shareholders as well as industry regulators. Antitrust officials are taking an interest in the deal and will probably examine how this merger will affect customers and their options.

According to the terms of the deal, British Sky Broadcasting will get 100% holding in Sky Italia for £2.5 billion, roughly $4.3 billion. This deal would be partially paid with £2.1 billion in cash, and the remaining £380 million paid for by transferring the 21% stake British Sky Broadcasting has in National Geographic to Twenty-First Century Fox.

The British company will purchase the 57% stake that Twenty-First Century Fox has in Sky Deutschland for £2.9 billion. British Sky Broadcasting must buy Sky Deutschland’s minority shareholder shares for €6.75, roughly $9.09, each.

Additionally, British Sky Broadcasting may have to pay $12 billion for assets of the European pay-television company.

The British company’s stock price fell 4.8% during trading on Friday in London, showing that investors do not have positive thoughts on the deal.

Twenty-First Century Fox’s Buyback Program

As for Twenty-First Century Fox, the company will use the funds from this deal to launch a new program to buyback shares, as well as improve its offer to purchase Time Warner.

The company approved a buyback plan last year, to buyback $4 billion worth of shares. The new plan, which will be announced on August 6^th, will be launched regardless of any prospective future investment or purchases.