It’s about to be one of the most active dealmaking years for media and entertainment companies in recent memory.
2024 saw crimped deal volumes as interest rates remained elevated and an unfavorable regulatory environment dampened sentiment. But 2025 has “the recipe for all the stars to be aligned,” according to Bart Spiegel, partner of global entertainment and media deals at PwC.
“I really do expect it to be a perfect storm for M&A to accelerate in 2025 from a deal value and a deal volume perspective,” Speigel said in an interview with Yahoo Finance.
He listed several catalysts for next year, including “significant dry powder on the sidelines,” the expectation that interest rates will continue to move lower, and a looser regulatory environment from the incoming Trump administration.
Plus, “this is not a steady state industry,” he said, referencing the “constantly changing” media landscape. “You’ve got market players that really do want to make moves.”
Experts say 2025 will be one of the most active dealmaking years for media and entertainment companies in recent memory. (Getty Images) ·Ershov_Maks via Getty Images
Those moves have already begun to materialize. Last month, Comcast (CMCSA) said it would spin off most of its cable properties into a new company after teasing the possibility just a few weeks prior. At the time, Comcast said it wanted to “play offense” in order to combat increased cord-cutting.
Wall Street analysts have said Comcast’s spun-off company could acquire other beaten-down cable properties, describing it as a positive development for competitors exposed to traditional networks, like Warner Bros. Discovery (WBD).
To that point, shortly after Comcast’s announcement, WBD also said it would undergo a corporate restructuring to separate its legacy networks, including CNN, TBS, TNT, HGTV, and the Food Network, from growth drivers like studios and its streaming platform Max.
“It appears we are closer to the tipping point given the combination of secular and cyclical challenges,” Bank of America analyst Jessica Reif Ehrlich wrote in a note to clients on Dec. 19.
Most streaming platforms are finally profitable or, at the very least, close to break-even. But the demise of the cable bundle is still a complicated mess for legacy players looking to survive in a new digital-first era.
For years, linear advertising and affiliate fees, or the fees pay-TV providers pay to network owners to carry their channels, had consistently boosted revenues for legacy media. But the shift to streaming saw cable subscribers decline, hurting affiliate revenue.
The pressure from deteriorating linear networks, coupled with heavy debt loads, has forced legacy media giants to cut costs wherever possible, resulting in mass layoffs and restructuring efforts.
Earlier this summer, Warner Bros. Discovery and Paramount Global (PARA) took a collective $15 billion hit on the values of their respective cable businesses.
“Given this backdrop, it is clear further consolidation is needed,” MoffettNathanson analyst Craig Moffett wrote in a report published Dec. 3. “There has been endless chatter for years in the press and from media executives around extricating the overhang of linear networks on overall company performance.”
Outside of Comcast and WBD, Disney (DIS) has also explored cleaving off its traditional TV assets, which include broadcast network ABC and cable channels like FX, Freeform, and National Geographic. Disney CEO Bob Iger has since walked back those comments, but it’s still possible a spin-off or asset sale could be revisited, according to analysts.
And with Paramount’s deal with Skydance Media set to close in the second half of 2025, it remains unclear what will happen to Paramount’s cable and TV properties after the merger.
“There are a lot of efficiencies to be had by combining many of these companies,” Reif Ehrlich recently told Yahoo Finance in a separate interview. “Can these companies survive as part of a bigger entity? Yes, of course they can.”
One entity that might be a buyer of depressed linear assets is cable and streaming company Starz, which will complete its long-awaited separation from Lionsgate Studios (LION) early next year.
Starz, which is expected to make its public debut on the Nasdaq around mid-January, plans to expand margins from 15% to 20%, with CEO Jeff Hirsch noting M&A can help fuel revenue growth.
“If you look at the disruption going on in the business today, there’s a lot of linear networks, or ad-supported networks that serve the demos that we serve today,” Hirsch said at a UBS media conference earlier this month.
“I do think there’s an opportunity once we separate, once we have our own balance sheet and a currency, to go out and acquire some of those linear assets,” he continued, adding he believes companies “will shed assets first before they consolidate.”
Regulatory easing will be the most important M&A tailwind, according to experts, even if the Federal Reserve commits to a higher-for-longer policy stance.
“There’s an appetite for people to go out and do deals in a much more friendly environment,” PwC’s Spiegel said.
Total deal volumes and values in the media and telecommunications sector over the past year saw a slight uptick compared to a downbeat 2023, according to PwC’s biannual US deals outlook.
Over the past 12 months ending in November, there have been 2,088 deals — a 4% year-over-year increase — with announced deal value totaling $135.5 billion, a 26% rise versus 2023.
Telecom giants led the charge, with Verizon’s $20 billion acquisition of Frontier Communications one of the largest deals of the year.
“I think telecom deals will continue to increase,” Spiegel said. “But we’re also going to see much more media and entertainment M&A.”
FILE – President-elect Donald Trump speaks during a meeting with the House GOP conference, Nov. 13, 2024, in Washington. Trump is generally viewed as more friendly toward dealmaking than President Biden. (Allison Robbert/Pool Photo via AP, File) ·ASSOCIATED PRESS
President-elect Donald Trump, generally viewed as more friendly toward dealmaking than President Biden, has already signaled a looser policy stance with his Cabinet picks, like Brendan Carr as the new chair of the Federal Communications Commission.
Carr, who has frequently advocated for deregulation and an intent to revisit ownership limits, could spur more consolidation within local and broadcast television at a time when companies are desperate to compete in a digital-first world.
Nexstar Media Group (NXST) CFO Lee Ann Gliha told Yahoo Finance earlier this month that Carr’s nomination served as “the first signal” of future disruption.
Nexstar, which controls the CW Network, along with Fox Television Stations, Sinclair Broadcast Group, Gray Media, and others have been desperate to gobble up more TV stations in order to better compete with Big Tech in the race for viewers and ad dollars.
But there’s a cap on how many TV stations a single media entity can own. The current rule is that a station cannot collectively reach more than 39% of all TV households in the US.
Of course, no one knows exactly what will happen once Trump takes control of the White House. Or what deregulation policies will be put into place once he does.
But one thing is clear: The future of media and entertainment M&A looks a lot brighter compared to years past — and it’s happening at a time when Hollywood is finally ready to shake things up.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].
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