Just in this last week of 2023,Warner Bros.
He sees as much as $5.5 billion in synergy cost savings in a Paramount-WBD merger, for instance.
Vice Media was sold to Fortress Investment Groupand others for $350 million.
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Theme park operatorsSix Flags and Cedar Fair merged.
Likely Candidates
Heading into 2024, Paramount is facing financial pressures and exploring a sale.
Theres interest from wealthy individuals and all the usual suspects, said one dealmaker.
People would love to own the studio but have to figure out what to do with the linear networks.
A bunch of people have looked at it and cant make the math work yet.
Par is highly levered, lags in free cash flow and still hasnt put a timeline for streaming profits.
WBD, some said, should be laser focused on paying down debt, not another merger.
Lionsgate studios will split with Starz in early 2024, creating two stand-alone companies and digestible acquisition targets.
One Wall Streeter wondered ifFoxand News Corp. may take another run at merging.
The company behind Bally sports-branded networks holds local broadcast rights many Major League Baseball and NBA teams.
Disney declined comment on that.
The company has also been seeking a strategic partner for ESPN.
And then, there are always deals that come out of left field, says one longtime media analyst.
Endeavor owns WME, live sports and other businesses.
Distribution assets can also be impaired by being peeled away from a studio.
Eleven interest rate increases starting in March 2022 choked transactions by inflating the cost of borrowing.
Lower rates will pull private equity firms off the sidelines.
Its has had mixed success blocking deals outright, but a few big wins.
And a regulatory challenge can delay closing a deal, which is also risky in a fast-changing business.
Larger deals might have to wait, said Peter Supino of Wolfe Research.
Putting these companies together doesnt fix the problem, said Rich Greenfield of LightShed Partners.
The problem is, they cant compete withNetflix.
They need to stop.
They need to shut down these streaming services or scale them back dramatically.
Streaming losses are top of mind on Wall Street today.
However, mergers would also consolidate streamers and could help create a Netflix rival.
We have this weird conundrum, said Citis Jason Bazinet.
He sees the current moment shaped by four chapters, starting in 2017 when media companies were in denial.
Around 2019, the lightbulb went off Netflix was not a complement to pay-TV, but a substitute.
Then came a flurry of consolidation and the launch of in-house streaming services.
The cost of capital was zero.
The Street was rewarding growth, Bazinet said.
And that was sort of the disaster of 2022 and 2023.
It was when media companies started to recalibrate.Theyve become more pragmatic.
Media companies now play down streaming.
Their movies are back in theaters.
Theyve promised not to invest huge sums on production or on marketing.
Bazinet believes they can make money in streaming.
Theres nothing sort of structural, he said.
Its just going to take time.
Chapter Five, he said, is where a player challenges Netflix and changes the narrative.
Disney is best placed, but a combination of other streamers could be a third.
Others will keep the pedal to the metal.
