Paramount (PARA) majority owner Shari Redstone is reportedly considering selling the entertainment giant to Skydance media, while Altice USA (ATUS) is considering selling its news arm, Cheddar News, to private equity firm Regent. Both potential deals raise questions around the state of streaming services and potential M&A activity heading into 2024. Matthew Harrigan, Benchmark Analyst, joins Yahoo Finance to give insights into why he feels both headlines are "a bit of a surprise," though he also notes that it media conglomerates are looking to get "more scale" relative to competition from the likes of Netflix (NFLX), Disney (DIS), Amazon (AMZN) and others.

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Video Transcript

JOSH LIPTON: Deal activity driving a lot of action in the media space. Some of the big movers in today's session, Paramount Global and Altice. Paramount pulling back from gains last week that Shari Redstone is considering selling a controlling stake in National Amusements, that's the parent of the entertainment giant. Altice under pressure on a CNBC report it may sell cheddar news to a private equity firm.

Joining us now is Matthew Harrigan, analyst at Benchmark. So Matthew, thank you so much for joining us. I want to start actually, Matthew, with Paramount, because that's been making a lot of headlines, these reports that the parent company may be sold. Matthew, I know you don't directly cover that name, but just interested to get your general take on those headlines as an analyst who covers the space.

MATTHEW HARRIGAN: Sure. I think it's a bit of a surprise. I mean, my colleague, Dan Kurnos, our broadcast analyst, actually follows the name. And I think that they really started or really started to improve operations in a number of regards. I mean, you're above 60 million subscribers now on Paramount Plus to take one instance.

And I think it's a little surprising that after everything they've gone through that they'd be willing to sell at what would be probably a heavily discounted price to the sum of the parts valuation. I don't think that's any news. I mean, most of these media conglomerates have traded at very significant discounts, I mean, maybe for 15 or 20 years apart from momentary bubbles.

But I think my colleague would be inclined to downplay it somewhat. But I think there is a real imperative to get more scale when you look at the competition relative to not just even Netflix and Disney, but also Amazon and others.

JULIE HYMAN: And, Matthew, just more broadly here, when you look at this landscape, it feels like that there is a lot in play in terms of deals and deal activity potentially happening in 2024. Is that what you see? Do you expect an uptick?

MATTHEW HARRIGAN: Well, I think the media group is really in kind of perma play. I mean, every year at the [INAUDIBLE] company conference, I think people are always talking. And action can be another matter. I mean, some of the longer-standing deal, deals that people talked about with Viacom and the Paramount Global haven't happened. And then people have been really taken aback by certain surprises.

So I think there is an imperative to get more consolidation. I think there's probably some residual antitrust concern, even though it may not be rational for certain businesses. I mean, you may recall that theater deals were very difficult for a number of years because of a Supreme Court ruling going back to 1954. And I think you could probably have a little bit of resistance in Washington to combining broadcast networks and particularly if you combine news operation. You can see what's happening in the UK right now with The Telegraph and Jeff Zucker and potentially Abu Dhabi being supposedly a passive potential investor in concert with Zucker. So I think people are talking certainly. But talking is very-- it's very difficult to satisfy all parties when you look at the valuations right now in traditional media.