Media insiders are speculating about potential industry-shaking deals in 2021, like a merger of AT&T's WarnerMedia and Comcast's NBCUniversal or a tech takeover of MGM or Lionsgate.
Insider spoke with 10 media bankers, consultants, and other experts about how talks between media giants could play out.
Legacy-media companies that recently bet on streaming to reach people who were abandoning traditional media, like Comcast, AT&T, and Discovery, will likely take a hard look at how those efforts are faring, said media consultant Sebastian Blum, a partner at OC&C Strategy Consultants.
Companies who deem their efforts promising may try to snap up troubled assets that could propel their streaming ambitions farther, such as content owners MGM, with its Bond franchise or Lionsgate.
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Others, particularly those that have been on buying sprees in recent years, may try to unload assets that aren't moving the needle or consider other combinations to get a new edge. That's part of the rationale behind talk of a long-shot merger between AT&T's WarnerMedia and Comcast's NBCUniversal.
"Firms like Comcast and AT&T already dismantled everything that they could," Blum told Insider, referring to how the distributors snapped up media companies in the past. "They will think about what to do next. How do I get a critical mass of these people? What are the configurations that make sense? Is it time to change horses?"
Those conversations could create a boon for smaller content companies, production houses, animation shops, and other studios, leading to combos like Reese Witherspoon's Hello Sunshine and Gwyneth Paltrow's Goop.
Smaller companies like Will Smith's production company Westbrook might also be an acquisition target as big operators look to scale up.
"You're going to see the Disneys of the world, the HBO Maxes, the Peacocks, looking at all kinds of content fare, especially family and independently owned," said EisnerAmper's Michael Breit, who runs the tax and advisory firm's sports and entertainment group.
Local media could see a burst of activity if the Federal Communications Commission, while still under Ajit Pai, argues for a relaxing of local ownership limits. The Supreme Court is set to weigh in on the topic later this month; ownership rule changes at the FCC have been blocked by courts.
Disney: could unload assets that aren't moving the streaming needle
Market capitalization as of January 11: $324.8 billion
Some think Disney try to sell off its non-DTC assets like its news and sports properties, now that its streaming service has momentum.
One of the most speculated moves is a spin of ESPN to existing Disney shareholders. Much will depend on how the NFL rights negotiations go after the Super Bowl concludes. Disney's ABC hasn't had a Super Bowl in some time. Disney wants to simulcast the event between ESPN and ABC but the outcome will depend on what rival bids look like. And with AT&T's Sunday Ticket package looking like it might come loose, might Disney pick it up?
ESPN's streaming transition hasn't been the rocketship Disney Plus has. Its subscription streaming service ESPN Plus has 11.5 million subscribers, compared with Hulu's 38.8 million and Disney Plus' 86.8 million.
But ESPN's audience of sports fans is still attractive to Disney investors, and its sports rights and programming are key to the company's streaming expansion plans in Latin America, making Disney less likely to part with the sports network this year.
One highly placed source notes that the Street has not punished Disney for all the parts that aren't working, such as theme parks and the inevitable decline of its traditional TV business, and so all chief executive Bob Chapek needs to do is keep pedaling and he can keep it all together, if he chooses.
AT&T: could spin out Turner, DirecTV, or other assets
Market capitalization as of January 11: $205.4 billion
AT&T is in the midst of a spectrum auction that is reaching into the stratosphere. The bidding, which has topped $78 billion, will test the financial pockets of big telecom players.
The high price could put pressure on AT&T to sell more of its assets, leaving some wondering if WarnerMedia head Jason Kilar will be able to hang on to Warner's gaming unit.
A much-rumored combination of WarnerMedia and NBCUniversal might seem remote, though it's hard to rule out AT&T selling Turner or its parts. A source close to the company said AT&T has been more friendly to bankers who are presenting ideas to spin-out Turner, which is tightly integrated with the rest of the company and would be tricky to separate.
If a deal comes together in the latter half of the year, then there'd likely be a CNN sale, which some hope would interest an ultra-high networth individual like a Laurene Powell Jobs, Jeff Bezos, or his ex-wife MacKenzie Scott.
AT&T might also make good this year on a long-speculated spin off DirecTV. WSJ reported in December that AT&T was taking bids for the satellite-TV service from private-equity firms including Apollo Global, TPG, and special-purpose acquisition companies such as Churchill Capital Corp. IV.
AT&T probably won't come close to recouping the $49 billion, not including debt, that it paid DirecTV for in 2015, though. The WSJ said the bids valued DirecTV at around $15 billion with debt.
Comcast: could spin off NBCUniversal
Market capitalization as of January 11:$233 billion
Comcast's NBCUniversal is in a period of deep transformation, slashing headcount at traditional channels to make way for streaming investment at the Peacock network.
Wall Street prognosticator Rich Greenfield argues that NBCU doesn't need to be part of a big distribution company and could merge with WarnerMedia. "We believe investors would be ecstatic over a combination," he wrote in November.
It might be worth NBCU chief Jeff Shell trying to sell this idea to Comcast's chief executive Brian Roberts if the big pivot to streaming plan proves underwhelming.
ViacomCBS: could make a play for MGM and Lionsgate
Market capitalization as of January 11: $24.9 billion
When Viacom finally came together with CBS, word was controlling shareholder Shari Redstone would acquire something big. Redstone ended up taking a piece of Miramax, leading some to think MGM and Lionsgate are likely targets.
Maybe now, at the right price, MGM has more impetus to join forces with the self-described programming "arms dealers" of streaming. AMC Networks, owner of properties like "The Walking Dead" franchise, is another potential target.
ViacomCBS stock had a rough ride in 2020, when it was trading in the twenties, down from its current price of around $40. The only way is up in 2021 as the company looks to rebrand CBS All Access into Paramount Plus and continue selling shows to rival streamers.
The company sold CNET and publishing company Simon & Schuster in 2020 and tried to offload its headquarters, known as Black Rock. Black Rock will likely be on the block again this year, and ViacomCBS could decided it has other non-core assets to shed.
It could also eye MGM to bulk up on IP.
ViacomCBS is now so small versus the rest of the media universe that it could become a target itself, with potential buyers from Discovery to Amazon, which looked at CBS's books before the merger.
Few think Redstone is in any mood to relinquish her mogul status just yet, but to keep it, the company needs CBS to hang on to NFL rights — which means ViacomCBS has to go big or go home.
Discovery: positioning itself as a buyer
Market capitalization as of January 11: $15.5 billion
Last year, reports suggested Discovery might combine with a player like ViacomCBS trying to amass scale to challenge frontrunners like Netflix and Disney in streaming. But, in the past year, Discovery has positioned itself more as an acquirer.
A French news outlet reported in September that Discovery had held talks with Italian media company Mediaset SpA for a potential partnership, and one media consultant says it shows the company is more interested in being a buyer than seller.
CEO David Zaslav also revealed in December his plan to make Discovery an international name in streaming with Discovery Plus, which will house the company's catalog of comfort programming and brands like "90-Day Fiance," the Planet Earth franchise, and Chip and Joanna Gaines' Magnolia Network. With some help from Verizon, Discovery Plus hit the top of the free app charts.
There's no word yet on subscriber numbers, but the Tokyo-Olympic Games should whet consumer appetites across Europe.
Sony Corp.: could buy MGM or exit the studio business
Market capitalization as of January 11: $130 billion
Sony Corporation of America has long been the crown jewel of Japan's tech giant Sony, and as such is viewed as an acquisition target by other media and tech giants.
The company houses a movie studio, gaming unit, TV assets, and a giant music business, which may suddenly look more valuable as rival Universal Music comes to the public market in 2022.
In early 2020, Sony acquired Insomniac Games for $229 million, and could be on the hunt again if WarnerMedia decides to sell its games unit. Under the leadership of Tony Vinciquerra, Sony Pictures Entertainment may also decide it wants to expand its movie franchise and incorporate MGM, which is considering a sale.
If history is a guide, Sony won't sell its media assets and is unlikely to join other congloms in doing day and date releases via streaming.
SPACs: on the hunt for media companies
Special Purpose Acquisition Companies are proliferating, and everyone wants to run one or get in on the gold rush by accessing the cash.
BuzzFeed's Jonah Peretti and Group Nine's Ben Lerer are each forming their own to take advantage of less stringent rules than traditional IPOs. Their aggressive moves leave media watchers wondering if Vice Media's Nancy Dubuc will follow suit and fulfill cofounder Shane Smith's longtime hope of taking the company public.
SPACs rely on investors trusting strong management teams to identify assets that might perform better with more access to cash.
Former Disney chief Kevin Mayer, Tom Staggs, and Shaquille O'Neal raised $300 million for their venture, while former Goldman Sachs alum Gerry Cardinale is hoping to acquire sports data firms through a SPAC created by his company's RedBird Capital to capitalize on what will be a hot sector in 2021.
Last week, former Dick Clark Productions' chief executive Michael Mahan launched Bright Lights Acquisition.
Whether there are enough enthusiasts to go around remains to be seen. Skeptics think we're headed for Tulip mania circa 1637.
Firms focused on live-entertainment could gobble up venues and clubs
Live-entertainment has been stymied by lockdowns for the past year, but the industry is hoping for a "Roaring 20s"-style boom when things reopen.
Breit at EisnerAmper said he expects a range of companies such as Live Nation, James Dolan's MSG Entertainment, and SPACs, to snap up venues, music clubs, and other live-event spaces during the first half of 2021, in anticipation of an explosion of live-entertainment in the second half of year.
For those looking to bet that consumer habits have changed and that going out is still a risky business, the growth of online celebrity platforms such as Cameo, Patreon, and StageIt might prove a worthy investment. Both Cameo and StageIt are out shopping for fresh capital.