Traditional TV Outlets Will Begin to Be Rolled Up by Private Equity in 2026, Analyst Predicts

Despite the initial view in Hollywood and on Wall Street that the Trump administration would accelerate consolidation in the media industry, that hasn’t happened. Instead, the president has taken aim at media M&A like Paramount Global’s pending $8 billion merger with Skydance Media.

TD Cowen analyst Doug Creutz predicted in a Monday research note that it is unlikely consolidation between any of the major studios will occur in 2025, primarily due to regulatory issues. But he does see consolidation of linear networks being a possible outcome in the near-term, especially if Warner Bros. Discovery follows Comcast in spinning off its linear assets.

“We tend to think 2026 is a more likely timeframe, with private equity being the most likely consolidator,” Creutz wrote.

In addition to consolidation, the firm said that traditional media companies should abandon their direct-to-consumer ambitions and return to being wholesalers.

Creutz argued that the DTC model requires “significant consumer acquisition spending” including overproduction of new shows and that bundling allows content producers to take more risks with projects that have narrower but deeper audience appeal. He added that consumers loved when streaming was cheaper than linear TV and had no ads, but the emergence of sporting events on streaming has raised prices and the introduction of ad tiers have made it a “very different equation.”

“We think the only way the industry returns to real health is to give up on the standalone [direct-to-consumer] product dream and figure out a way to rebundle everyone’s content together. In our view, standalone [streaming] is just fundamentally the wrong business model for TV,” he wrote. “The battle here isn’t streaming vs. linear, but unbundled vs. bundled. We do believe that recent moves toward bundling such as the Disney+/Max offer are directionally correct, though the end of the Venu venture was a step backwards. Ultimately, we think the industry will need to fully commit to the bundle in order to fix the currently broken economic model.”

TD Cowen said that visibility on long-term streaming profitability remains low and that it expects a continued slowdown in subscriber growth compared to 2024, noting most of that growth came from bundling deals with cable providers. It also said further price increases will likely have a negative impact on churn rates due to content spending cuts.

“Media remains in the difficult position of its business model remaining in flux, with no clear answers on the horizon to the question of what TV/film/OTT value creation will look like in five or ten years. The addition of potential macro disruption to the mix doesn’t help, particularly with linear advertising likely to lose share faster in a recession than in a healthy economy,” Creutz added. “TV is beginning to look a lot like print and other ad verticals that have been hollowed out by digital. While our media companies are seeing growing digital ad revenue, we think the group is still several years away from growth in the latter meaningfully outweighing losses in the former.”

The bank lowered its 2025 estimates on Disney from $93.9 billion in revenue and $17.1 billion in operating income to $93.7 billion and $16.9 billion, respectively. It also lowered Paramount’s 2025 estimates from $29.3 billion in revenue and $3.1 billion in adjusted operating income to $28.4 billion and $2.9 billion, respectively.

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