Warner Bros. Discovery Pushes for Deregulation of Media Deals Amid Shareholder Losses

In the past five years, significant media mergers have resulted in substantial losses for shareholders, totaling tens of billions of dollars. Rob Kindler, global chair of M&A at Paul, Weiss, argues that these deals should be evaluated against the potential outcomes had no consolidation taken place. The current U.S. administration's regulatory stance has been criticized by media executives, including David Zaslav, who express a desire for a more favorable environment for mergers and acquisitions under the next presidential administration. The ongoing debate centers on whether major media and technology companies are genuinely interested in acquiring smaller rivals for their content or if they find these assets undesirable due to regulatory hurdles. Zaslav's merger of Discovery Communications with AT&T's WarnerMedia in 2022 exemplifies a strategy aimed at survival in a challenging market, suggesting that consolidation may be essential for legacy media companies not aligned with tech giants like Apple, Google, and Amazon. The market capitalization of Paramount Global, the result of the merger, has plummeted to approximately $7 billion, reflecting a broader trend of declining asset values in the media sector. Despite the apparent failures of recent mergers, some analysts question what the alternative would have been for companies that chose not to consolidate, as many smaller firms have struggled independently, with Lionsgate's stock dropping over 35% in the same timeframe. While the regulatory landscape has changed, transactions continue to occur within the media industry. Dealogic reports that last year's media deal volume reached $51 billion, although this figure remains significantly lower than the median of $85 billion from the previous seven years.