M+A Mania

Thinking about 2025, I’ve resisted the urge to prognosticate about the year to come in a Predictions post given that we generally get a lot wrong. But I’ve been reading a lot of speculative preview coverage of 2025’s M+A Mania, even after writing about the likelihood of increased fragmentation in addition to (or instead of) mega-consolidation a few weeks ago.? Aside the political topography, a couple of interesting nuggets from S&P Global via The Wrap’s coverage worth highlighting:

• “A lack of capital among potential strategic buyers. The combination of depressed equity prices and high leverage leaves strategic buyers with limited capital resources to finance potential acquisitions.” With interest rates presumably coming down, capital shouldn’t be as much of an issue but there is only so much debt companies can take on. So I am reading this as traditional studios being sellers, not buyers, and tech and telecom players (Verizon anyone) to enjoy a particularly high profile amid ongoing M+A speculation.? That said, I think it will be a buyers market.

• “A wide difference in perceived value between potential buyers and sellers. Sellers point to continued cash flows and see long-term value. Buyers are more skeptical about the long-term viability of the sector and ascribe no terminal value.” This is the basis of my fragmentation thesis (and maybe where it gets fun). As a marketer, I think about the value of the brand in combination with audience action (viewership, affinity, advocacy, consistency, revenue) so I was looking closely at Variety's Most-Watched Television Networks year-end list for big names with significant percentage drops that could be had for a discount and well-known brands ranked on the bottom of the top 100 that could be relaunched in a more modern configuration.

Are all of these going to be acquisition targets? No. Some will just be shuttered by their parent companies as we bemoan the bygone era of daring experimentation and channel stuffing our cable packages. But some may live on. So, as always, stay tuned.?

Postscript: Facing a steady decline in subscribers, the major cable and satellite companies have increased their monthly subscriptions by approximately $15/month during 24, which is about the same cost as a Netflix standard tier. Feels like the epitome of bad product/market fit. So while I don't know if there will be major consolidation amongst the top-tier studios, there is far more line of sight for consolidation among cable service providers with the winners able to provide a suite of bundled services.

Links

• The Wrap "Ready, Set, Go: Hollywood Is Poised for M&A Mania in 2025"
• Screen City Riot "SpinUp Co"
• S+P Global "U.S. Media And Entertainment: Looking For The Winds Of Change In 2025"
• Variety "Most-Watched Television Networks: Ranking 2024’s Winners and Losers"
• NScreenMedia "The top 7 SVODs cost half as much as cable TV"