Oct 28, 2021: The Information’s Creator Economy Summit

Entertainment Media/Telecom

At Sun Valley, Plenty of Sellers but Few Buyers

Media and tech moguls gather at Sun Valley in Idaho this week for the annual Allen & Co. conference after one of the biggest years for deals in media in decades. Now the question is which company will be swallowed up next.

Among the most likely targets are smaller film and TV studios: MGM, Lionsgate and possibly Sony Pictures and cable channel giant Discovery, each of which are likely too small to compete longer term in a landscape dominated by giants like newly enlarged Disney, Comcast, AT&T, Amazon and Netflix. Spanish broadcaster Univision is also a likely target as it has reportedly tapped bankers to explore a sale. Below we look in more detail at potential targets.

The Takeaway
• CBS still actively discussing Starz acquisition
• Viacom/CBS deal is imminent
• Lionsgate could buy MGM post Starz sale

The challenge is finding buyers. AT&T, Comcast and Disney have each taken on a lot of debt in their acquisition of Time Warner, Sky and Fox’s entertainment assets, respectively. That likely rules them out as possible acquirers for the foreseeable future. AT&T CEO Randall Stephenson isn’t even going to Sun Valley this year, although WarnerMedia chief John Stankey will be attending, according to a person familiar with the situation. 

The most obvious potential acquirer is Shari Redstone’s empire, including Viacom and CBS. The two companies are expected to announce a merger in the next few weeks. And Ms. Redstone, who will be attending Sun Valley, told The Information recently that even if the companies combine, she thinks they would need more scale to compete in today’s landscape. CBS has already had informal discussions about buying Lionsgate’s Starz channel. It could potentially go after Lionsgate itself—and maybe MGM.

There is also the possibility that one of the big tech companies, such as Amazon or Apple, takes the plunge in buying an entertainment company. Amazon continues to invest in programming, including buying a stake in the New York Yankees recently. Apple has unveiled its Apple TV+ streaming service, and it may decide it needs to own a studio to compete with Netflix and Disney. “Amazon and Apple don’t have the library they need to compete, so at some point they are going to have to buy them,” said Michael Nathanson, an analyst with MoffettNathanson. Both Mr. Bezos and Apple CEO Tim Cook are regular attendees at Sun Valley.

One big obstacle to any tech-media acquisition is the current anti-tech sentiment in Washington, D.C. Antitrust regulators are already reviewing the big four tech companies, ensuring any other deal would get a lot of attention.

Then there are the upstart media companies, where a long-awaited consolidation has barely begun. While Mic got swallowed up, most of the new-media firms to raise venture backing in recent years are still independent. These include BuzzFeed, which had another round of layoffs earlier this year, and Vice, which also had layoffs and raised a new round of financing. Both companies are trying to turn around their businesses in a challenging market. 

Some companies, like Vox and Group Nine Media, have been casually scouring the landscape for acquisitions, but their strategy has focused primarily on smaller niche publications rather than linking up with other larger digital media companies, according to people familiar with the situation.   

Here are the media companies that could be bought in the next several months:


Value: $5.5 billion (market capitalization plus debt)

As The Information first reported, CBS has had informal talks with Lionsgate about buying its premium channel Starz, but no formal offer has been made. A deal would help strengthen Showtime, which CBS owns, as well as give it more international reach for its streaming service. CBS Acting CEO Joe Ianniello and the board are still discussing a potential deal, but there are a few challenges standing in the way. For one, AT&T’s deal to carry Starz on DirecTV expires next month, while Comcast’s deal to carry the channel comes up for renewal by the end of the year, according to people familiar with the situation. If AT&T and Comcast were to decide to drop Starz, the channel would lose almost half of its revenue, according to people familiar with the situation. 

It may be more likely that after CBS and Viacom recombine, as is expected in coming months, the new company tries to buy all of Lionsgate. The company’s film library, which includes “The Hunger Games,” could help CBS attract subscribers to its streaming service CBS All Access. Price remains the biggest outstanding question. Lionsgate was asking for at least $5.5 billion just for Starz and would want closer to $7 billion for the entire company, according to people familiar with the situation. But $5.5 billion is what Lionsgate itself is worth right now: its market capitalization is $2.6 billion and it has $2.9 billion in debt. Lionsgate stock has lost half its value in the past 12 months to its current price near $13, as its profits dropped sharply on lower movie revenues. 

That stock drop could bring back toy maker Hasbro, which held discussions to acquire Lionsgate two years ago when the stock was trading around $35. Lionsgate’s  library would help Hasbro, which already has a TV studio, to create more movies and TV shows tied to its toys. Lionsgate shareholders have reason to take any offer seriously: The movie and TV production business has shrunk drastically in the past six years as hits have dried up and home entertainment revenues evaporated. While the purchase of Starz offset those declines, Lionsgate now has a lot more debt.

MGM Holdings

Value: $4.5 billion–$5 billion

MGM, which is known for hit movies like the James Bond franchise, is owned by a group of private equity firms, including Anchorage Capital Group, Highland Capital Management and Solus Alternative Asset Management. Because of its film library, it has long been seen as a potential acquisition target for companies like Apple trying to get into video streaming.

MGM has been looking for a strategic partner to help expand its Epix cable channel, which it bought two years ago for $1 billion, but some people say that its owners would be open to an overall sale of the company. MGM Chairman Kevin Ulrich, who runs Anchorage, has not been open to a sale historically; some people say MGM would want closer to $7 billion.

One possibility is Lionsgate, if it succeeds in selling Starz, would buy MGM to bulk up its film library, according to one industry executive. Another option is that Viacom/CBS buys both MGM and Lionsgate. That would give Ms. Redstone’s empire more content for its streaming services, and it could ensure that its Showtime premium cable channel was better positioned to compete with WarnerMedia’s HBO. But telecom companies as well as tech companies could also be interested in being home to the Bond franchise. 

Sony Pictures

Value: $10 billion–12 billion 

Lots of companies would love to buy Sony Pictures, whose library includes the “Spider-Man” franchise. And the studio would be a good fit for a number of acquirers, including Viacom/CBS, Amazon and Apple, which tapped two former Sony Entertainment executives to launch its own video streaming service. 

Historically, Sony CEO Kenichiro Yoshida has said the company isn’t for sale, but last month activist investor Dan Loeb called on Sony to separate its entertainment division from its electronics unit. If that sparks interest from buyers willing to pay a good price, it’s possible Mr. Yoshida would change his mind.


Market value: $33 billion (including debt)

Discovery is the leader in reality TV, nature documentaries and other “unscripted” programming. Last year it acquired Scripps, the owner of HGTV and Food Network, giving it a strong viewership among women, which could make it attractive to some potential acquirers. Also, its Eurosport division has many exclusive sports rights in Europe, including the Olympics. Since sports is one of the few categories that people watch live, this makes Discovery a potentially attractive acquisition for a company with a large international presence. Discovery CEO David Zaslav will be at Sun Valley. 

A combined Viacom-CBS could be a buyer for Discovery, although any such deal would be a year or two off, given the task of integrating Viacom and CBS first, said one person familiar with the situation. Another issue to be resolved would be who would control the company: Discovery’s biggest shareholders include veteran media mogul John Malone, while Ms. Redstone has control of Viacom and CBS.

Univision Holdings 

Value: $9 billion–$12 billion

Univision last week confirmed it had hired bankers to explore a potential sale. The owners of Spanish-language broadcaster Univision—private equity firms Madison Dearborn, Thomas H. Lee Partners and TPG, as well as mogul Haim Saban—are looking for an exit 12 years after they bought control of the company. A planned IPO a few years ago was scrapped. 

Univision had a chance to sell over the past five years, with interest from companies including Time Warner and Discovery. But the owners wanted a high price of more than $20 billion, according to one industry executive. Now, though, with Univision’s ratings down, the price has likely fallen a lot—to no more than $12 billion, the executive said. 

However, selling Univision may still prove challenging. For one, Mexican broadcaster Televisa owns a 36% stake in Univision (and also has an exclusive agreement with Univision by which it provides its content through 2025). 

It’s possible Discovery is still interested. Another possibility is Viacom/CBS (CBS reportedly was interested in the past).

Ultimately, a Viacom/CBS-Discovery-Univision rollup could be an interesting combination that would have a large international presence, news, sports, scripted and unscripted entertainment, as well as a big audience among Spanish speakers and women. Mr. Saban is expected to be at Sun Valley. Perhaps he and Ms. Redstone can talk.


Value of deal: $34.6 billion (UBS estimate)

Earlier this month, UBS analyst John Hodulik floated the idea of AT&T spinning off its DirecTV satellite TV unit through a merger with Dish Network. The two companies are reportedly open to such an idea. It would be one of the most logical deals of the year if it were to happen. Both satellite TV firms are losing customers to cord-cutting. A merger would help them cut costs and negotiate lower programming costs. For AT&T, such a spinoff could help it reduce debt. Mr. Hodulik floated a scenario under which AT&T sells a controlling stake in DirecTV to Dish: He estimated that AT&T could reduce its debt by more than $20 billion and receive valuable spectrum from Dish in the process. 

One obstacle to that idea is that Dish appears intent on expanding in the telecom business, which would make it unlikely to give up its spectrum. Even so, it’s conceivable that a combination of the satellite TV firms would happen. Regulators have blocked this before, but times have changed.

Jessica Toonkel is a New York-based reporter for The Information covering media and how the industry is being disrupted by technology. Before that, she spent seven years at Reuters covering a range of topics including media, mergers and acquisitions and financial services. She can be found on Twitter @jtoonkel.