Hollywood Dealmakers Eye Creators as Mega-Merger Options Dwindle

The pool of potential mega-mergers in Hollywood is dwindling, prompting dealmakers to shift their focus toward creators, intellectual property, and smaller entertainment firms that can grow into larger businesses. Erik Hodge, a partner at Raine, highlighted the growing emphasis on intellectual property (IP) and the migration of established Hollywood talent to platforms like YouTube, where creators can build substantial audiences without the infrastructure typically provided by traditional studios or networks.

This shift towards creators and IP could redirect investment away from mega-mergers like Paramount's $110 billion acquisition of Warner Bros. Discovery and Fox's $22 billion purchase of Roku. Instead, focus may turn to individual pieces of IP, creator businesses, and independent production companies.

John Kulback of Loeb & Loeb noted that creator businesses often start with individual personalities and brand deals, eventually requiring more sophisticated infrastructure. Successful examples include YouTube stars like MrBeast, who have evolved from solo creators to broader content and consumer-products businesses.

Gaming is another area attracting investor interest, with Take-Two Interactive being a notable investment. The panelists also discussed M&A not solely being driven by cost-cutting, but also by providing companies and creators with access to resources and scale. AI technology is an emerging investment opportunity, with the potential to blur the lines between technology IP and content IP, raising questions about copyright, image, likeness rights, and guilds.

In summary, Hollywood's future M&A landscape is expected to be less focused on large-scale consolidations, and more on investments in creators, IP, and independent companies poised for expansion.