Title: Warner Bros. Discovery Eyes Troubled Media Assets for Acquisitions
In a recent exclusive interview with CNBC, John Malone, the chairman of Liberty Media, Liberty Global, and Qurate Retail Group, hinted at a potential shift in U.S. regulators’ stance on media consolidation. He suggested that regulators may be more open to allowing media companies to merge if one or more of the companies in question is facing the prospects of bankruptcy. This could pave the way for Warner Bros. Discovery to explore distressed assets in the coming months.
CEO David Zaslav has confirmed that Warner Bros. Discovery is preparing to be an acquirer in the next 12 to 24 months. The company is looking to bolster its balance sheet in order to facilitate acquisitions of media businesses that have faced a decline in valuations. This move comes in the wake of plummeting media company valuations due to streaming video losses, traditional TV subscriber defections, and a decline in the advertising market.
Zaslav noted that Warner Bros. Discovery is positioning itself to be an acquirer rather than a distressed asset by actively paying down debt and increasing free cash flow. The company is implementing a strategy to generate at least $5 billion in free cash flow this year and has paid down $12 billion in debt. However, it is expected to miss its year-end leverage target due to challenges in the TV ad market and declining linear TV subscription revenue.
Malone has expressed optimism about the prospects for Warner Bros. Discovery to capitalize on distressed assets in the media industry. He noted that the exemption to antitrust laws on failing businesses could potentially allow for greater latitude in mergers and acquisitions of troubled media companies. With Paramount Global and Comcast’s NBCUniversal being identified as potential targets, Malone sees an opportunity for Warner Bros. Discovery to make strategic acquisitions.
While no specific targets for acquisition were named, Paramount Global was brought up as an example of a company with shaky prospects, further hinting at Warner Bros. Discovery’s intentions. Malone emphasized the potential regulatory hurdles of certain acquisitions, given the complexities of the media industry and the changing landscapes of streaming services and broadcasting networks.
Although Warner Bros. Discovery’s plans for acquisitions are still unfolding, the company’s strategic positioning and preparation to be an acquirer signal a potentially transformative period for the media industry. With regulatory and financial considerations at the forefront, it remains to be seen how Warner Bros. Discovery will navigate this landscape in the coming months and possibly reshape the competitive dynamics in the media sector.