Media M&A Mania Gotcha Reeling? Try Skepticism

As if anyone needed evidence that the incoming Trump administration was going to usher in a deregulatory era for the next four years, a federal appeals court decision this week to block the FCC’s attempt to establish net-neutrality rules was as clear an early indicator as they come.

The legal development would certainly work wonders to cure any lingering skepticism that regulatory hurdles could stand in the way of a widely expected and long anticipated consolidation frenzy to trigger M&A in the media sector.

But M&A could just as easily stand for “media amnesia” as it does mergers and acquisitions at the start of every year, when prognostications of dealmaking binges to come are treated as a fait accompli in the media sector. And every year the ensuing 12 months fall far short of that.

Media M&A mania hits the world like clockwork so hard at this time of year that the FDA should put something in the flu shot to inoculate against it.

This year might seem to be different given a Republican administration already giving welcoming signs to doing business. And yet analysts are raising red flags suggesting transactions aren’t as easy to pull off in the short term as they might seem.

“Despite this industry discussion and speculation, we don’t think many sizable deals will materialize for a number of reasons,” wrote Naveen Sarma, managing director of S&P Global Ratings and a veteran credit analyst focused on the media business, in a research note last month, adding that potential buyers were facing depressed equity prices and high leverage that left them with limited capital resources to finance potential acquisitions.

Sarma noted buyers would not be easily persuaded by sellers’ pitch that their cash flows in the short term translated to terminal value, considering the existential challenges facing traditional media. He also questioned whether the deregulatory environment that would allow TV station operators to gobble up more market share would be a near-term priority for a Congress with bigger fish to fry.

Blair Levin at New Street Research had some questions about the regulatory picture as well, but in his own end-of-year research note, he made clear the next 12 months were pivotal for the sector: “2025 will likely be the most consequential year in media (and telecom) policy since 1996, with the interplay of different policies highly volatile and uncertain.”

While Levin identified plenty of upside scenarios for deregulation, including accelerating the transition to next-generation TV and requiring broadcasters to hold another incentive auction, there are a number of downsides centered on the potential actions of incoming FCC chairman Brendan Carr.

Citing Carr’s comments connecting the controversy over CBS News editing of a President Trump interview last year to getting a stamp of approval on a deal for parent company Paramount Global to merge with Skydance, Levin suggested there could be a chilling effect on moguls who would be spooked over pulling the trigger on transactions that would run afoul of offending the administration.

He also said media CEOs could be discouraged by the following comment Carr posted to X last year: “Broadcast media have had the privilege of using a scarce and valuable public resource — our airwaves. In turn, they are required by law to operate in the public interest. When the transition is complete, the FCC will enforce this public interest obligation.”

Serving an amorphous “public interest obligation,” Levin reasoned, could dilute the more traditional profit-centric goals moguls are more accustomed to chasing on behalf of their shareholders.

In the event M&A does come to pass this year in the media sector, one could only shudder at what it will mean as far as layoffs, which have taken quite a toll even during recent years in which the consolidation frenzy predicted in previous Januaries didn’t come to pass.

Roughly 36,000 jobs have been eliminated across broadcast, television, film, news and streaming over the past two years, according to Challenger, Gray & Christmas, which tracks the job market.