The Media and Entertainment Deal Machine Is Revving Up

Cable penetration of America's TV households has dropped to 51% from 86% over the past decade, as per Nielsen

- 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.