Complicated financial engineering doesn’t typically pique the interest of Hollywood heavyweights, but recent moves by Comcast and Warner Bros. Discovery, and a fateful decision by Disney last yr, are quietly pulling back the curtain on the difficult debates raging in media corporate board rooms across the industry.
To make sure, Comcast’s decision to spin out (most of) its cable channels and Warner Bros. Discovery’s move to restructure itself by separating its linear cable channels and its studio and streaming businesses are being done within the name of potential dealmaking and Wall Street handwaving.
But with that glimmer of deals within the eyes of the CEOs comes a chilly hard reality: Because of cord-cutting, the assets of their portfolios, the cards of their hand, are losing value day by day. But a number of – perhaps only a few – could emerge from the present tumult much more priceless than they were before.
Which is why these firms are hoarding them, at the same time as they contemplate larger deals.
A fast glance shows some themes emerging: Studios — each film and TV — are crown jewel assets, comprising the core of the content engines for these firms and a fount of mental property. Film studios particularly are viewed as brand-builders in an era where IP continues to be in hot demand.
Broadcast networks, likewise, are crown jewel assets, given their established three-letter brands, reach and scale in sports and news.
And even a number of stray cable channels are finding themselves anointed as crown jewels, with the parent firms expressing confidence that they may survive even within the event of a cable TV catastrophe.
Just have a look at Warner Bros. Discovery, which is dividing its business lines in two: “Global Linear Networks” and “streaming and Studios.” On one side is the money cows of the corporate, linear TV channels like CNN, TNT and TBS. On the opposite is the Warners film and TV studios and the streaming service Max, which see growth on the horizon.
But Warners can be strategically taking HBO, one in every of the best-known brands from the cable TV era, and putting it within the streaming and studios bucket. To WBD, HBO is a crown jewel, not an asset to be stashed with the remaining of the declining cable networks.
At Comcast, its cable split will see the corporate keep its TV and film studios, in addition to Peacock, while spinning off its linear channels. That’s, with a few exceptions: NBC and the cable channel Bravo will remain with Comcast, at the same time as all the things from USA and MSNBC to E! And Golf Channel are sent to SpinCo.
NBC, in fact, is the flagship broadcaster, and next yr will dramatically increase its sports programming output when it adds NBA and WNBA games. Bravo, meanwhile, has managed to forge a definite brand identity because of franchises just like the Real Housewives and Below Deck (call it “upscale trashy reality TV”) that has change into a serious driver of viewership on Peacock, a source accustomed to the numbers says.
The bet is that even when cable TV vanishes, Bravo the brand can survive.
And while firms like Disney and Paramount haven’t restructured like Comcast or WBD, they’ve also quietly signaled that their priorities lie with some sub-brands, and never with others.
Last yr Disney found itself in a carriage dispute with Charter Communications, the country’s largest pay-TV provider. The 2 sides cut a deal, but that deal saw a lot of cable channels, including Freeform, FXX, and Disney Junior, kicked to the curb, while locking in rates and carriage for the likes of ESPN, ABC and Disney Channel.
“We protected our primary entertainment channels,” Disney Entertainment co-chair Dana Walden told THR after the deal was accomplished. “You realize, they’re very essential to our bottom line and our pipeline of family and general entertainment content to our DTC services.”
And at Paramount, Skydance is actively enthusiastic about its plans for the corporate when its deal closes next yr. The Paramount studios – especially its storied film studio – are protected. That may be a given, but on the TV front, it’s more complicated.
Incoming president Jeff Shell told reporters over the summer that he views CBS as a “crown jewel” asset, albeit one where they may “manage it a bit more aggressively for money flow.” And so they laid out a vision to make Paramount+ a dominant player in streaming, perhaps via a tie-up with one other player.
However the legacy Viacom cable channels like MTV, Comedy Central, Nickelodeon and BET are simply not as high a priority. The corporate is more likely to consolidate its TV networks after the deal is complete, and would consider spinning its cable channels off or selling them, with only CBS off the table completely.
2025 is shaping as much as be an enormous yr for deals, given the Comcast spinoff, the (presumed) closing of the Skydance-Paramount deal, and other potential mixtures.
“Along with WBD, we anticipate other media firms will consider parting with a few of their cable TV network assets now which could drive an efficient industry roll up vehicle,” a Bank of America research team led by Jessica Reif Ehrlich wrote in a Dec. 19 report. “These assets must be higher positioned as a consolidated, linear-focused vehicle with scale advantages that may drive affiliate and promoting negotiation in addition to synergies.”
But the most important entertainment firms, it seems, have already picked their winners and losers, keeping their favored business units close, and leaving other to hang around to dry.
Within the streaming era, brands still matter, and studios still matter, but the businesses at the center of the entertainment business are already making tough selections about where to position their bets.
