A media M&A chill: The Paramount-WBD antitrust challenge may hold up more deals than one

Long-awaited media M&A appeared to be finally getting off the ground in recent months.

But the delay of Paramount Skydance's $110 billion proposed acquisition of Warner Bros. Discovery has industry insiders now citing a chill on mergers and acquisitions.

Last month, Paramount agreed to put its tie-up with WBD on hold until as late as June 2027, roughly nine months past its planned closing, while an antitrust challenge brought by a group of state attorneys general heads to trial. The deal had already won approval by global regulators, including from the Antitrust Division of the U.S. Department of Justice.

Media executives and onlookers say the threat of increased scrutiny by state regulators, as well as a monthslong process before the dust settles, could put more than just Paramount's megamerger on ice.

"It feels like the landscape has shifted significantly in the last few weeks around larger deals and combinations," said Jonathan Miller, a media industry veteran who currently serves as CEO of Integrated Media, which owns a portfolio of media and creator ventures.

What once felt like a regulatory environment welcoming of mergers during President Donald Trump's second term now feels hampered by the threat that states could take up the regulatory baton.

U.S. companies have inked just over 7,500 deals so far this year through Aug. 20, up from 7,015 during the same period last year, according to data provider Dealogic. Collective deal value is up considerably, too, as more megadeals get across the finish line.

Media companies have been raring for some time to be part of the action as they seek to cut costs and add scale to their businesses amid the bleed of pay TV subscribers.

Besides Paramount's takeover of WBD — which itself came months after David Ellison's Skydance completed its acquisition of Paramount — the industry has seen announcements of combinations, spinoffs and partnerships accounting for tens of billions of dollars in media market cap.

Fox Corp. plans to acquire Roku for $22 billion. Comcast, after separating out its portfolio of cable networks into Versant, is now planning to spin off NBCUniversal — which also recently formed a partnership between its Peacock streaming service and YouTube. Netflix has also come to the negotiating table after long vowing to build rather than buy.

The future of Fox and Roku's marriage was called into question in a recent analyst note, despite the transaction having relatively fewer antitrust concerns than Paramount-WBD. The deal got a lukewarm reception from investors in June but is nonetheless considered a strategic pivot for Fox into streaming distribution.

Bernstein analysts noted what could be a "regulatory timing risk, particularly given the ongoing PSKY-WBD process."