By Joe Flint
The ranks of media owners and entertainment companies are poised for their biggest makeover in a generation.
Media titans such as Comcast and Warner Bros. Discovery are cleaving off their cable-television channels, while television-station operators such as Allen Media and Apollo Global Management are exploring selling dozens of stations. Cox and Charter, two of the biggest cable and broadband companies, have agreed to merge.
Warner said on Monday that it will split into two publicly traded companies. One will house its flagship movie and television studios and HBO Max streaming service, while the other will consist primarily of cable channels such as CNN, TNT and Food Network.
Such changes promise to remake the television firmament, creating a new media and entertainment landscape.
Media and entertainment companies are trying to "get their own houses in order," said Jon Miller, an industry veteran who is chief executive of Integrated Media Co., an investor in digital media.
The year could be even more transformative if station groups such as Nexstar Media Group, Sinclair Broadcast Group and Gray Media -- and possibly some private-equity firms -- seize the opportunity to roll up local television stations and cable networks.
"We are prepared to capitalize on deregulation through M&A," Nexstar Chief Executive Perry Sook said last month. Sinclair executives also expressed optimism that the door to dealmaking will eventually get cracked open.
Gray has also said that it is open to purchasing more stations or swapping assets with other broadcasters.
"Everybody is talking to everybody. There is a lot of three-dimensional chess being played here," said Gray Executive Vice President Kevin Latek.
And if Skydance closes its merger with Paramount Global, it will likely look to acquire more local TV stations to boost its CBS broadcast network, a person familiar with the company's thinking said.
To date, the Trump administration has sent mixed signals on its openness to consolidation.
Federal Communications Commission Chairman Brendan Carr has said that he wants to ease broadcast ownership rules limiting how many stations a company can own, but that effort could take a year or more.
Sinclair has pushed for such a change, saying in an April FCC filing that broadcasters are competing with big media and tech companies "with both hands tied behind our backs due to archaic regulatory structures that fail to reflect current competitive conditions."
Run-ins with President Trump have chilled some companies' appetite for dealmaking, according to industry officials and analysts.
CBS parent Paramount Global has offered $15 million to settle Trump's lawsuit against "60 Minutes," but Trump's team wants more than $25 million and is also seeking an apology, The Wall Street Journal has reported.
Meanwhile, the FCC has been reviewing Paramount's $8 billion deal to merge with Skydance.
Once one of the most desirable assets because they generated sizable profits, cable networks are now considered a relic of a bygone media era. A big reason is changing consumer habits.
Cable penetration of America's TV households has dropped to 51% from 86% over the past decade, according to media-measurement firm Nielsen. That shift, driven by streaming, has led to ratings plummeting at once top-rated cable networks.
Warner-owned TLC's average prime-time viewership has more than halved since 2019, according to Nielsen. During the same period, HGTV's viewership dropped 44% to 663,000.
Ad revenues, which are tied to ratings, have fallen as a result, and programming costs have risen since the pandemic. Most cable networks are still profitable, but not as profitable as they had been.
Networks with a heavy diet of sports, such as Warner's TNT and Disney's ESPN, have fared better. Live sports, especially professional football, have proven to be ratings winners, though the cost of sports rights has skyrocketed.
Industry officials and investors now view traditional television channels as slow-melting ice cubes. Wall Street is encouraging spinoffs.
Comcast's NBCUniversal is nearing completion of a spinoff of NBCUniversal cable networks. Last month, Lions Gate Entertainment separated its cable and streaming platform Starz from its movie and television studios.
"It was only a matter of time before the dominoes started falling," said Paul Verna, vice president of content at research firm Emarketer.
Some industry analysts expect Skydance to explore spinning off the Paramount Global cable networks including MTV and Comedy Central.
Disney, which had explored unloading its cable networks and TV stations, now has no interest in uncoupling. Disney Chief Executive Bob Iger said on CNBC earlier this week that there are still enough traditional TV subscribers to "generate a significant amount of revenue in both cases, in advertising and in subscription fees."
Scooping up such offerings would make sense for buyers, analysts said. Scale could help during carriage negotiations with distributors and offer the opportunity to cut costs.
TV station chains such as Nexstar have argued that they need to gobble up rivals to withstand big-tech companies that have sapped their viewership and the ad dollars that follow them.
The FCC's Carr has echoed that point. "Localism is one of the key guide stars of our policy," he said in a recent interview. "We don't want local broadcasters to ultimately go the way of newspapers."
Carr's deregulation plans hit a setback after two commissioners resigned, robbing the chairman of the quorum he needed to make some major rule changes. He still has the power, however, to grant waivers on a case-by-case basis to TV groups looking to enlarge.
All of the maneuvering though may not solve a fundamental problem: customers prefer streaming.
Traditional media "are moving deck chairs around," said Steve Schiffman, a Georgetown University adjunct professor who worked in the industry. "At the end of the day, they need new ideas," he said.
Write to Joe Flint at Joe.Flint@wsj.com
(END) Dow Jones Newswires
June 10, 2025 20:00 ET (00:00 GMT)
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