What's next for media space? Let's look at the logical M&A deals

The media industry has seen consolidation over the last few years with companies looking to add more and more content to their existing portfolios. The media houses want a share of the streaming space and take on the likes of Netflix Inc. (NASDAQ: NFLX), Disney Inc. (NYSE: DIS) and Amazon.com Inc. (NASDAQ: AMZN)

It all kicked off with the mergers between Discovery and Scripps, AT&T and Time Warner, Comcast and Sky, Viacom and CBS, and also, Disney and Fox. With the recently announced merger of AT&T’s WarnerMedia business unit and the acquisition of MGM Studios by Amazon, we could see further consolidation as smaller companies try to compete better against the streaming giants.

Let’s take a look at some possible mergers that could happen in the future, as compiled by CNBC.

NBCUniversal and Lionsgate

NBCUniversal is a mass media and entertainment company owned by Comcast. Lionsgate owns some popular shows including “Mad Men,” “Orange is the New Black,” “Nashville” and “Zoey’s Extraordinary Playlist.” It licenses these shows to other streaming players. 

If Comcast can acquire Lionsgate it can add a slate of great shows to the roster of NBCUniversal’s video streaming service called Peacock. And the company will also get access to Lionsgate’s premium network Starz which is set to reach 60 million global subscribers by 2025.

Lionsgate has a current market capitalization of around $4 billion so it will light on the balance sheet of Comcast as well.

WarnerMedia-Discovery and ViacomCBS

AT&T recently announced the merger of its WarnerMedia business segment with Discovery with AT&T shareholders retaining a majority control in the combined entity. Discovery’s majority shareholder John Malone said on CNBC that post-merger the company would be open to explore a merger with NBCUniversal as well. That deal will be difficult to pass the regulatory scrutiny given the size and assets of the two companies.

Instead, WarnerMedia-Discovery and ViacomCBS could look at a possible merger. CBS is the broadcast network of Viacom while WarnerMedia-Discovery doesn’t have one. It would also bring together the movie studios Warner Bros. and its much smaller rival, which is more likely to pass any concerns of the regulators.

Disney and AMC Networks

Disney’s Hulu streaming service could do well with access to AMC Networks shows targeted at adult audiences such as “The Walking Dead”. Hulu licenses most of its content and with the recent acquisition of MGM studios by Amazon, MGM-owned show — “The Handmaid’s Tale” — may no longer remain on Hulu. AMC expects to have 25 million subscribers by the end of 2025. AMC Networks has a current market capitalization of $2.2 billion so it would not be an expensive buy for Disney.