On Nov. 7, a day after Donald Trump’s presidential victory, Warner Bros. Discovery chief David Zaslav delivered a not-so-subtle message to Wall Street: It’s open season on dealmaking, and Hollywood is better off for it.
Discussing the narrowing field of players in a media and entertainment environment that’s in a “generational disruption,” the CEO said that the upcoming administration may “offer a pace of change and an opportunity for consolidation that may be quite different” and “provide a real positive and accelerated impact on this industry that’s needed.”
The sentiment was echoed Perry Sook, chief executive of TV giant Nexstar who noted that he intends to jump on deals: “We believe that there is value to be created for our shareholders through further consolidation.”
And also by Sinclair chief executive Chris Ripley. “It does feel like a cloud over the industry is lifting here, and we do think some much needed modernization of the regulations will be forthcoming,” he said. “We intend to participate in that, in the M&A in the industry, be it as a buyer as a seller or a merger partner.”
A palpable buzz has taken hold of corporate boardrooms that another four years of Trump — and perhaps more importantly an administration not beholden to President Joe Biden’s antitrust ideology — will free up dealmaking.
For years, media titans who’ve seen their empires slowly fade into obscurity as linear TV declines and streaming upends legacy competitors have grumbled over the government’s about-face on its scrutiny of mergers and acquisitions after decades of rubber-stamping deals. They’ve been positioning themselves for a return to a not-so-long-ago time that saw Disney gobble up Marvel, Pixar and Lucasfilm (not to mention most of the Fox empire).
At an investor conference in September, Sony chief executive Tony Vinciquerra predicted “chaos” in Hollywood over the next two years. “Mergers and bankruptcies and sales and all kinds of fun things,” he said, adding that only the biggest companies will survive absent “some massive mistake or miscalculation.”
And with Trump in the White House, the kind of volatility that resulted in deals — good (think Google’s $1.6. billion purchase of YouTube) and bad (think AT&T’s $100 billion takeover of Time Warner after it bought DirecTV for $49 billion at the peak of the TV business) — is in the air. By way of consolidation, media could be radically reshaped from the top-down without the regulatory oversight that’s stymied mergers in recent years.
“It’s the perfect storm,” says Alan Klein, a partner at Simpson Thacher & Bartlett who was involved in the purchases of Twitter by Elon Musk and Activision by Microsoft. He notes a confluence of factors incentivizing dealmaking that also includes a soft landing for the economy and the lowering of interest rates.
Once in office, Trump’s first order of business will likely be to remove Lina Khan as chair of the FTC and Jonathan Kanter as head of the antitrust division of the Justice Department. They collectively filed 50 merger enforcement actions in the fiscal year ending in 2022 — the highest level of oversight in over 20 years (28 in 2023). Not reflected in that figure is the sharp uptick in the number of transactions that’ve been abandoned after antitrust concerns were conveyed. It also doesn’t account for deals that simply didn’t move beyond boardroom discussions due to their activity.
Trump’s next move after that may involve rolling back certain antitrust initiatives pursued the duo, namely revised merger guidelines, which give a road map for regulatory review of acquisitions that was considered hostile to dealmaking.
“There was a real shift during the Biden administration, with Lina Khan and Kanter pushing the boundaries around new and developing theories of harm that was a starker contrast from prior administrations that relied more on traditional antitrust theories,” says Edward Lee, a partner at Kirkland & Ellis who advised mogul Vince McMahon in WWE’s merger with UFC.
For signs that potential buyers were scared off by the government, look no further than Paramount Global‘s sale to Skydance Media, a smaller competitor whose acquisition of a major studio could sidestep scrutiny by the Justice Department.
Like that deal, expect further encroachment by Big Tech onto Hollywood. Purchases involving the largest studios, like Disney, WBD and Netflix, will concern regulators. But under a regime that cares less about mergers between companies at different levels of the supply chain (think producers and distributors), does YouTube look to fortify its offerings as one of the top distributors of TV programming?
“They’re on the cusp of creating the new behemoth in media,” says David Sands, a partner at Sheppard Mullin’s entertainment practice who handles mergers and acquisitions. “Will they move for a studio to lock up content?”
Though Trump is expected to continue antitrust cases against Big Tech, some of which he started, he’s signaled an openness to the scale and reach of the industry. In October, he indicated skepticism over forcing Google to divest parts of its business after the Justice Department won a pivotal antitrust case against the online search giant.
“If you do that, are you going to destroy the company? he said at an event in Chicago in October. “What you can do without breaking it up is make sure it’s more fair.”
That remark shined a spotlight on the power that Trump will wield over dealmaking. In the weeks leading up to the election, tech C-suites cozied up to the president elect, who fielded calls from Google’s Sundar Pichai and Apple’s Tim Cook, reported The Wall Street Journal. There’s more value in having Trump’s phone number or knowing someone who does than with previous presidents, according to an individual who has a personal relationship with Trump.
Media executives have taken notice of the dynamic. In September, Zaslav and Elon Musk were seen sitting next to each other at the U.S. Open. The next month, WBD hosted Tesla for its robotaxi rollout event, which led to the studio getting sued for misappropriating Blade Runner 2049. If you ask Zaslav, he’s likely to say the lawsuit was more than worth it: He gets access to the foremost Trump whisperer, and along with him, Trump’s ear if he were to pursue a regulatory risky deal.
Also in the cards: TV station consolidation. In Sinclair’s earnings call on Wednesday, Ripley was bullish in the loosening of industry regulations over what he called “outdated broadcast rules” that probit the ownership of more than two top four ranked TV stations in the same local market, and for good reason. The conservative-leaning TV empire nearly secured an effective oligopoly in TV broadcasting when it reached a $3.9 billion deal to buy Tribune with the help of Trump’s FCC, which in 2017 revived a decades-old regulatory loophole that exempted it from exceeding federal limits on media ownership. The deal was only scrapped after intense push back from special interest groups and Democrats, who voiced concern over the weaponization of programming to support Republican presidential and congressional candidates in swing states.
Like Sinclair, Nexstar, which ended up buying Tribune, pointed to regulation as the “number one priority” of both the TV giant and broadcast trade group NAB.
“Our industry’s real competition comes from big tech companies who have unfettered access to every screen in America, from phones, desktops to the TV in the living room,” Sook said. “Yet our ability to compete with those behemoths is stymied by regulations that were last updated in 2004. This industry needs strong companies who can compete on a level playing field for both viewers and advertisers on every screen in America, not just some of them. And the time is now to seek this reform and Nexstar is once again prepared to lead.”
Still, macroeconomic factors will supersede regulatory concerns. Trump campaigned on promises to impose higher tariffs — a move that will likely lead to higher prices and more inflation. Wall Street economists have predicted fewer rate cuts from the Fed next year, which will hinder dealmaking across all industries.
To some workers, Hollywood is better off without any more consolidation. In recent years, many industry groups, namely the Writers Guild of America, have faulted dealmaking for undermining labor.
“Mergers are bad for workers, period,” says writer Adam Conover. “There’s less competition for your services, and so you get paid less.”
Alex Weprin and Katie Kilkenny contributed to this report.