The ripple effect of America’s chaotic trade war will cause some would-be dealmakers to pump the brakes, stifling potentially transformative moves at a time when the international industry is still reeling after three tough years. C21 investigates the impact of Trump’s tariffs.

In recent years, heads of media companies and major studio groups have regularly spoken of the need for more consolidation to enable them to compete with the global streaming giants.

François Riahi

For the legacy US studios, their existence is likely dependent on it. Warner Bros Discovery (WBD) president and CEO David Zaslav last year said, whomever won the US election, he wanted them to create the conditions for more mergers and acquisitions. Paramount Global, meanwhile, has been acquired by Skydance in an US$8bn deal, although the completion of the transaction has been held up as it is reviewed by the Federal Communications Commission (FCC).

Across the Atlantic, content suppliers are also looking to bulk up, with RedBird IMI’s US$1.45bn deal to buy All3Media and Mediawan’s KKR-backed purchase of Leonine Studios among the biggest European deals of 2024.

More recently, Banijay Group CEO François Riahi said his company is eager to be part of a supposed wave of upcoming dealmaking. Consolidation “matters in this industry because we are working more and more with global clients like Netflix, Amazon etc, which are giants. If you want to work well with giants you have to be big – you cannot be small,” Riahi said last month.

But amid US president Donald Trump’s schizophrenic international trade war, which has shaken global markets in ways not seen since the onset of the pandemic in 2020, making major decisions about buying and selling assets takes on new layer of complexity and peril.

American media companies have been bruised by the market collapse triggered by Trump’s ‘Liberation Day’ on April 2, with WBD stock down around 25% in the time since, Disney down 15%, Comcast down 8%, Fox Corp down 15% and Paramount down 10%. Netflix hasn’t been hit as hard, up more than 2% since April 2, in part thanks to an uptick following a Wall Street Journal report on its goal to reach a US$1tn valuation by the end of 2030. Meanwhile, shares in Amazon and Apple (whose streaming operations account for minor parts of their overall businesses) are down 11% and 13%, respectively.

Given the enormous international footprint of these companies, the overall health of the international production community is closely tied to the prosperity of this group of studios and streamers. And if they endure a sustained downturn in fortunes, they won’t be making as much content, particularly if production costs increase simultaneously.

Each have contrasting business models, but a picture of the challenges they will collectively face is starting to come into focus, with pundits highlighting an advertising pullback and rising production costs among numerous factors that will take a toll on the international television business.

Uncertainty over when and where Trump’s tariffs will hit is troubling the industry

Gage Skidmore via CC

One source who leads a media-focused private equity (PE) firm tells C21 the broader market volatility acts as a significant “dampener” on potential M&A moves.

“Even in times when things are problematic, if you have a general sense of where the market is headed or where policy is headed, you can at least come up with a strategy. Or even at an organic growth level, you can consider that if we invest in X then Y will happen. But in the absence of understanding where things will go, it acts as a dampener for the overall M&A market.”

Amid a fast-changing economic picture in which trillions of dollars in stock market value can be lost or gained following a Truth Social post from Trump, it isn’t hard to see why some might prefer to wait out the storm before plotting their next M&A moves.

Against this backdrop, would-be buyers are less likely to assign high valuations to their acquisition targets, even if they are clearly performing well.

“That means the seller is wondering why on earth they should push the bird out of the nest right now when they’re sitting on a performing asset and there’s a horrible market backdrop,” says the source. “So even if there’s a desire, uncertainty dampens overall valuations. And for even the most highly performing assets, sellers would rather sit on it for another year or two.”

There is a trickle-down effect that can stifle investment into the media and entertainment sector. Last week, the source got in touch with a large institutional limited partnership (LP), which are the organisations that invest money into private equity or venture capital firms. The response was crystal clear: talk to us again in five or six months.

“They said: ‘Let’s pin this until the fall because we’re not doing anything right now – we just need to see where things shake out.’ So if PE firms are being told they’re not getting any more funding and not even getting meetings until the fall because of so much uncertainty, it has a trickle-down effect.”

Another top dealmaker tells C21 that it is too early to know whether the economic uncertainty rocking global markets will have an impact on M&A activity in the content sector in the short-to-mid-term. The exec said they recently had a meeting with both French content studio Mediawan and a US-based investment fund, both of which had indicated a desire to keep looking at investment opportunities despite the economic headwinds.

Perhaps the most pressing concern for US-based studios and streamers is that, amid rising costs for American consumers and fears of a recession rising, major brands will pull back on their spending. With the New York advertising Upfronts just a month away, the potential gravity of this situation may soon start to become clear.

A quick glance at recent earnings reports from US legacy media companies illustrates the issues this could cause. In fiscal year 2024, WBD and Paramount Global generated US$7.3bn and US$8.18bn respectively in television advertising revenue, while Comcast generated US$2.65bn and Fox Corp US$2.4bn in ad revenue in their most recent quarters.

“Truly the biggest issue is from the advertising base, which is obviously a big part of the funding ecosystem for entertainment content, especially as we’re heading into the Upfront period in May,” says a former top US studio executive. “That’s where the challenges will be felt, and the repercussions will be negative due to the advertising slowdown that I anticipate from the tariffs and the broader uncertainty.”

Exactly how bad this will end up being is up for debate, but analysts have suggested that an advertising pullback could accelerate the migration of ad dollars from traditional linear television to other platforms. If that were to happen, only linear platforms with significant exclusive major sports rights would be safe.

Will Trump help or hurt Hollywood in the long run?
One of the more interesting dynamics to emerge over the past few months is widely varying opinions on whether the Trump administration has a genuine desire to help the production sector in Hollywood (and the US, more broadly) as it contends with shrinking audiences and runaway production.

In a Truth Social post on January 16, Trump vowed to usher in was he described as “The Golden Age of Hollywood” that would focus on bringing back business lost to international jurisdictions. At the time, he appointed US actors Jon Voight, Mel Gibson and Sylvester Stallone as special ambassadors to act as his “eyes and ears” in Hollywood, which he described as a “great but very troubled place.”

Hollywood’s place as the heart of the movie industry is under threat

Adobe Stock

Many in Europe have taken his comments seriously, believing his administration is intent on bringing production back to the US, in addition to emboldening American studios and streamers to push back on the notion of being regulated in international markets.

British Film Institute (BFI) chair Jay Hunt, who is also the European creative director for AppleTV+, in late January expressed concern over the Trump administration’s “protectionist language around Hollywood.”

Then at Series Mania in late March, Olivier Henrard, deputy MD at France’s National Centre of Cinema, warned that the US is being more “aggressive” in fighting against local streamer regulations and that European Union (EU) members must work collectively to stare down US “threats.”

In Canada, where a vast number of US shows take advantage of generous tax incentives and the low dollar, some have expressed concern that the service production sector would be decimated if Trump somehow penalised American productions from filming outside the US.

However, this apparent concern in the UK, the EU and Canada is not necessarily felt in the US. Ask most American execs if they believe Trump will help Hollywood in any tangible way and the answer is a fairly resounding no.

Aside from his Truth Social post about returning Hollywood to a “Golden Age,” the moves of his administration have been anything but helpful to the American production sector.

Aside from the media-stock slide initiated by the introduction of (and then partial pause on) international tariffs, Trump – prior to taking office for his second term – went to legal war with Paramount’s CBS News and Disney’s ABC News, suing those organisations over allegations of election interference and defamation, respectively.

The FCC, led by Trump-selected chairman Brendan Carr, is also undertaking a review of the US$8bn Paramount-Skydance merger. With the review taking longer than expected, some are becoming nervous that it might not go through at all, particularly given that Trump’s legal spat with CBS News is ongoing. The FCC has also opened investigations against Comcast and others for its diversity, equity and inclusion (DEI) policies.

Trump’s ‘Liberation Day’ on April 2 saw media stocks plummet

Anne Nygård

Speaking to C21 anonymously, the former US studio exec says the film and TV business is evidently not high on Trump’s priority list, other than being a useful way to rail against “wokeness” and DEI policies.

“Other than his re-working of ‘woke,’ he’s got a lot of other things on his agenda and he does not appear to care about or lean into Hollywood,” says the exec, who currently leads an independent studio.

The PE company head, also speaking off-the-record, agrees that while trying to decode Trump’s Hollywood intentions might be an impossible task, he does not appear interested in helping the California production sector, which is on its knees as the volume of shows continues to dwindle.

“I don’t see anything that psychologically drives this administration as being helpful to Hollywood in the long run. And I think he has shown that through his frivolous litigation against media companies, like Paramount and Disney,” says the source.

“What does it mean to bring the Golden Age back to Hollywood? I don’t even understand that. So no, I don’t see him particularly helping Hollywood.”

Silicon Valley might be in the same boat. And despite Trump’s alignment with X and Tesla owner Elon Musk, and the recent efforts of other tech moguls such as Mark Zuckerberg and Jeff Bezos to cosy up to the administration, it would appear Trump’s disdain for big tech may almost be on par with legacy media.

Indeed, when Truth+, the sister streaming service to Truth Social, launched in Canada and Mexico last week, it took stabs at all and sundry. “We hope our northern and southern neighbours will enjoy a refuge from Big Tech corporations, monotonous news channels and woke TV shows and movies,” said Devin Nunes, CEO and chairman of Trump Media & Technology Group Corp, in a statement.

With Netflix set to kick off media and tech earnings season on Thursday, financial analysts will be eager to gain a picture of how a tumultuous global market backdrop could affect some of America’s biggest companies. But, of course, all executives will be well prepared with answers tailored to avoid putting their companies in Trump’s crosshairs.

The precise impact of Trump’s trade war upon the global TV and film industry will remain hard to measure, but there is no doubt that the market turmoil will only exacerbate some of the pervasive issues facing the business on the heels of the pandemic, strikes and commissioning cutback.

“M&A has been slow in this sector for a while following the strikes and the really poor buying backdrop,” says the PE source. “This period of slowdown preceded the tariffs and the trade war, but they are helping to only reinforce the dampening effect.”