2024 Predictions in the Media Sector: The Year of Potential Mega Merger Deals
Jan 06, 2024
The media industry is no stranger to mergers and acquisitions, with major companies constantly vying for market dominance. However, experts say that 2024 predictions could be a particularly active year for deals in the media industry.
Wall Street is already anticipating the next major merger in the industry. With challenges such as cord-cutting, a harsh advertising environment, and increasing profitability demands, businesses started rethinking their portfolios.
According to Bank of America analyst Jessica Reif Ehrlich, the industry is approaching a turning point that will lead to a new round of consolidations. In a note to clients in December, she stated that the combination of declining linear television subscribers and difficulties in generating profits from streaming services only reinforces the argument that consolidation is inevitable.
Biggest Potential Merger on the Horizon
But when will this consolidation occur? According to recent reports, it may be sooner than everyone thinks. Some sources revealed in late 2023 that Warner Bros. Discovery CEO David Zaslav and Paramount Global CEO Bob Bakish met in order to address the prospect of a possible merger. Neither company has commented regarding these reports, but they still have sparked active speculations.
Earlier, multiple outlets reported that Shari Redstone, president of her family’s holding company National Amusements (NAI), was considering selling their controlling stake in Paramount. This move could potentially pave the way for a significant acquisition by private investment firm RedBird Capital or Skydance Media CEO David Ellison.
With a current market cap of only $10 billion, Paramount appears as a prime candidate for acquisition due to its relatively small size compared to competitors like Disney and Netflix. Analysts predict that a possible merger involving Paramount would trigger an M&A frenzy in the industry.
Other Potential Deals
Meanwhile, Disney, which has long been a dominant player in the industry, signalled earlier this year that it may be open to selling certain assets. In an August interview with CNBC, CEO Bob Iger stated that the company would take “an expansive look” at its traditional TV assets, including broadcast network ABC and cable channels like FX and National Geographic.
In addition to major media companies, smaller players are also exploring potential deals. Altice USA has reportedly decided to sell its news unit, Cheddar News, to private equity company Regent. This move comes as the company looks to streamline its operations and focus on its core businesses.
Reasons for Consolidations in the Media Industry
So why are media companies suddenly looking to consolidate? Experts say that it all boils down to the challenging market conditions. Increasing expenses and overloaded balance sheets have caused major players in the industry to enact mass layoffs and make significant cost-cutting efforts. However, these measures have not been enough to keep investors satisfied.
The value of media companies remains low in the media sector, and most companies are still struggling to make streaming services profitable. As a result, many are turning to divestitures and mergers as a means of improving their financial standing. Some experts believe that in 2024 predictions the high-interest rate environment and stringent regulations will force businesses to reevaluate their portfolios and potentially sell off non-core assets. They also predict that uncertainty around the 2024 presidential elections in the US could be a serious obstacle for new deals.