Media M&A Should Be Fun In 2022 After Banner Year – The Hamden Journal

A surge in demand for content, big companies shedding non-core assets and consolidation in digital media led to a massive rebound in entertainment M&A in 2021, ushered in by two landmark combinations in April and ending with an drumbeat of deals in December.

Momentum is seen continuing into 2022 with a major asset, Starz, officially on the block (and by extension probably all of parent Lionsgate). Big broadcaster Tegna is formally fielding offers. Kevin Mayer and Tom Staggs’ active Blackstone-backed media company is adding Faraway Production, and the principals tell The Hamden Journal they’ll continue to eye deals in content, social media storytelling and related e-commerce.

All players, big and small, are scrutinizing their assets and exploring options.

“No one is sitting on the sidelines. They know that we are in an era that is going to set the stage for next 10 to 20 years,” said Bart Spiegel, PwC’s longtime partner overseeing media and telecom deals. “This is the time when everybody is staking out their positions.”

See graphic below for the biggest and most significant combinations of the year, which saw AT&T shed WarnerMedia in a deal with Discovery; Amazon buy MGM; and two major talent agencies, CAA and ICM Partners, come together.

Private equity is back and Special Purpose Acquisition Companies (SPACs) are in the picture, the latter more as stalking horses potentially driving up valuations than key players since many lack the financial resources for major deals. But SPACs typically only have 18 months to make an acquisition or they have to give investors back their money. Potential targets know that. The SPAC crush may be a reason Lionsgate put Starz on the market when it did.

M&A speculation came to a boil last spring (on the heels of WarnerMedia and MGM agreements), particularly focused on a potential mega-deal between ViacomCBS and Comcast. But what actually happened was smaller but logical distribution partnerships between them (Sky bundling Paramount+ in its markets like the UK, Ireland, Germany and Italy, and SkyShowtime launching in smaller European markets). After all, one company can’t two broadcast networks or two sets of television stations. And NBC’s shuttering of its NBC Sports Network begs a question that overhangs media deals — how many legacy cable nets are advisable to collect under one roof? (Comcast — and others — could be interested in Paramount alone.)


The Mayer/Staggs entity soon emerged as a new player with two deals worth nearly $4 billion in Hello Sunshine and Moonbug Entertainment, highlighting the enhanced value of content. Production companies with compelling content and good relationships with established players and platforms are sitting pretty right now.

A wide variety of players entered the deal mix this year. Politico was sold to Germany’s Alex Springer; Univision and Mexico’s Televisa joined forces to create a Spanish-language behemoth; Fox acquired TMZ and MarVista Entertainment; STX found a new owner, Najafi Companies; Endeavor sold its content arm to CJ ENM of Korea; Dark Horse Media went to a Dutch holding company; and AT&T unloaded Crunchyroll to Sony Pictures/Funimation.

The telco giant was in fact behind a big chunk of this year’s deal flow as it exited media. The John Stankey-led company also sold a stake in DirecTV to TPG Group, the third biggest industry transaction in 2021 (WarnerMedia was the first). Only two years after closing on Time Warner, A&T realized what it needed was really cash to pay down debt, buy spectrum and roll out 5G, in other words, its core business.

Same for Verizon, which divested its media business Oath (including Yahoo and AOL) to Apollo Global management.

According to PwC, media and communications deals totaled $233 billion last year, up 27% from (a slow) 2020. (However, its data includes sub-sectors that don’t always fall under The Hamden Journal’s purview like straight telecom, broadband, online education, cloud services and e-commerce deals.)

A few key deals have not closed yet. Discovery-WarnerMedia is anticipated in mid-2022. Amazon-MGM is also expected to go forward despite loud antitrust rumblings in the current administration. The DOJ has moved against one deal, suing to block ViacomCBS’ $2 billion sale of Simon & Schuster to Bertelsmann, which already owns Penguin Putnam. That deal presented obvious problem. But some on the Street think a lack of headlines since the lawsuit was announced in early November indicates ongoing negotiations and the combined company could shed assets to gain approval.

Regulatory concerns will be a consideration for MA& in 2022, as will interest rates, stock prices (some have been in rut) and family control, which is a particular issue in the media space. Also how aggressive tech companies will be in following Amazon-MGM. The explosion of streaming and demand for content will continue to drive the action.

What’s the Deal with 2022

The following is a grab bag of predictions for the industry’s highest-profile media players led by the new WarnerBros. Discovery, Comcast, ViacomCBS, Lionsgate, Fox and some other key players.

Warner Bros Discovery

David Zaslav, the Discovery CEO who will be running Warner Bros. Discovery, has said publicly he’d like it to keep growing and do more deals once his closes. Others see things unfolding differently once costs are taken out of the combined entity and the stock perks up. Because one new company shareholder who also happens to be Zaslav’s mentor, John Malone, “is a seller. He is always a seller at the right price,” said several Wall Streeters.

Could Comcast ultimately be the buyer?

Others see the new Warner Bros. Discovery merging with ViacomCBS. The latter, controlled by Shari Redstone, however, is also a logical buyer for Lionsgate or Starz. A Showtime-Starz tie-up has been out there, a combo Showtime boss David Nevins has backed in the past.

ViacomCBS stock is low so hard to use as deal currency. Lionsgate stock is low too, so it would want a hefty premium.

On tech, many think Apply needs a studio for original content and a library if it wants to expand Apple TV+ and that it will eventually buy one. As per above, the market cap of the company behind The Hunger Games, Twilight and John Wick is only $3.45 billion, but it’s likely worth considerably more in a deal, especially considering the $8.45 billion Amazon paid for MGM. Regardless, that would be chump change for cash-rich Apple, whose market cap is approaching $3 trillion.

YouTube, owned by Google/Alphabet, may studio shop too. Lionsgate or Paramount? Would Redstone sell Paramount? “She may have no option. That is the most valuable part of the company,” said one Wall Streeter.

In the deal equation it’s clear that Comcast, with a market cap of $230 billion and a controlling family that will never sell, is a buyer. Lionsgate is a seller. But ViacomCBS’ size – a $19 billion market cap – puts it in the middle. It could go either way, which is why it’s the focus of so much speculation.

Then there’s Roku.  What about a deal with Apple or Comcast? Owning Roku would let Apple offer consumers a cheaper alternative to the Apple TV box. Comcast could accelerate its streaming video strategy – although the Philadelphia-based giant has already entered the smart TV market this year. For Roku, owning a studio like Lionsgate would help it expand its library and produce more original content.

rupert murdoch

There’s also been increasing speculation about Fox and News Corp, sister companies owned by the Murdoch family. Could patriarch Rupert Murdoch, 90, make a move — i.e., sell — Fox? “Rupert would still have News Corp,” noted one analyst, with the mogul’s beloved newspaper assets led by the Wall Street Journal (now reaping healthy fees from Google and Facebook digital content deals), cash-flow-steady HarperCollins, Australian broadcaster Foxtel and a lucrative online real estate business led by Another broached the idea of Murdoch reconstituting News Corp. and Fox into a single public company again.

A so-called “free radical” in the entertainment ecosystem is AMC Networks, now run by interim CEO Matt Blank after longtime chief Josh Sapan stepped down. But where that company’s heading is known only to its controlling shareholders, the Dolan family. No one is out there speculating on what or when, but no one would be surprised at a deal.

Because the landscape continues to shift. Content is expensive to produce. Streaming services outside of Netflix and runner-up Disney+ may have to consolidate.

“Consumers are going to want three to five streaming platforms. In the future, as you see more people cut the cord, there won’t be any latency issues, no buffering. As the telcos build out infrastructure, it becomes really important for these companies to establish that first-mover advantage. Once you sign up for a platform, there is a stickiness associated with that,” said one industry expert. “It’s about, ‘What do I need to get us there?’ and ‘We need to move and move quickly.’”

Following is list of major media and entertainment mergers and acquisitions of 2021. Financial terms were announced in many cases, but for some the numbers given are unofficial or estimated. And, as mentioned, some were announced but have not yet closed.