Earnings season opens with a deal-doing lens
Skydance’s Warner Bros. Discovery deal has closed, Fox’s $22 billion Roku takeover is still pending and Comcast is separating NBCUniversal and Sky. The third-quarter earnings season is now framed less around which companies might sell and more around which ones can actually integrate what they have bought.
TD Cowen analyst Doug Creutz put the shift bluntly: “Media M&A is shifting from deal-making to deal-doing.” Among the largest moving parts: Paramount’s $110 billion acquisition of Warner Bros. Discovery, which formed Skydance, and Comcast’s planned spinoff.
Comcast executives said last week the company expects a $1 billion charge next quarter to cover separation costs, with much of the restructuring landing in its cable business.
Where the pressure sits
Creutz rates Skydance stock a hold, citing debt, cost cuts and the risk of integration and execution problems. His warning on linear assets is specific: cutting programming spending across the cable networks would accelerate value destruction and cord cutting, not repair the business.
On streaming, he expects margins to grow more slowly than in recent years, but combining Paramount+ and HBO Max could offer a one-time margin step-up. His larger view is that the industry should stop chasing standalone direct-to-consumer services and “figure out a way to rebundle everyone’s content together.”
Disney is positioned as a likely beneficiary while Skydance works through integration, because it holds what Creutz calls the best IP in media. He has buy ratings on Take Two, Warner Music Group, Universal Music Group, Live Nation and Comcast.
Other deals moving
- Newpress is raising $12 million led by Emerson Collective to build roughly a dozen creator-led channels, with former 60 Minutes executive producer Bill Owens joining as EP.
- Stagwell acquired Freestar, an ad-monetization business, raising questions about media independence and data control.
- RedBird Capital and Sound Ventures are forming a partnership to invest $1 billion in technology, media and culture.
- Byron Allen sold his Starz stake for $45 million, netting about $20 million.
The platform numbers that matter
Needham analyst Laura Martin values YouTube at $340 billion, about 10% of Alphabet. That puts it above Netflix at $256.7 billion and Disney at $188.7 billion. She expects revenue to grow 20% a year, with subscriptions reducing the platform’s dependence on advertising, and sees YouTube supplying differentiated data for Google’s Gemini AI work.
Martin flags a disclosure problem: Alphabet rarely repeats the same YouTube metric quarter to quarter, making the business harder to track as subscription revenue grows. She still rates Alphabet a buy with a $450 price target.
Lightshed’s Rich Greenfield says the next threat is Instagram Features, horizontal videos up to 90 minutes long available through Instagram’s TV app. “Every hour Instagram wins on TV is an hour not spent on Netflix, Disney+, Paramount+, Peacock or what is left of the multichannel bundle,” he notes. Meta also gets a competing claim on TV ad budgets. For holders of Netflix, Disney, Skydance, Comcast, Fox, Amazon and Apple, the competition for time spent is now intensifying.
Source: TheWrap
