Higher interest rates and an aggressive regulatory environment cooled the M&A market in 2023. However, 2024 is expected to be more active in consolidations as media companies cope with massive losses from streaming and the continued decline in cable and linear TV networks.
The largest media deals of 2023 were Disney’s acquisition of Comcast’s remaining one-third stake in Hulu for $8.6 billion and Paramount’s decision to sell its publishing arm Simon & Schuster for $1.6 billion to private equity firm KKR.
Several other moves were discussed but never consummated. Disney CEO Bob Iger floated the idea in a July interview with CNBC that he was open to selling the company’s linear cable assets, which he described as perhaps not “core to Disney.” Since then, Iger has returned his earlier comments on the matter, saying that he had been simply testing the waters on a potential sale. However, Disney remains mired in financial challenges, and a realignment of its divisions and assets is still a distinct possibility.
Paramount is also facing an uphill battle in trying to regain financial stability. The company is struggling to establish meaningful market share for its streaming service Paramount+ while registering significant losses on the effort. Its movie studio had only a so-so year, without any success in creating new movie franchises that could pay dividends in future years.
There is an open discussion of a sale, with Warner Bros. Discovery said to be first in line to kick the tires after its CEO David Zaslav said in November that his company is well-positioned to be a “buyer” in 2024. Earlier this month, Axios reported that Zaslav and Paramount CEO Bob Baskish met recently to discuss the possibility of a merger.
The U.S. Federal Trade Commission may be an obstacle to this combination, having taken an adversarial position on large media and tech mergers. However, given the challenges at Paramount and the media sector overall, it is possible this merger could be allowed because it is necessary for the industry’s health.