Welcome back to Dry Powder. I’m Bill Cohan.

It’s no exaggeration to say that Brian Roberts has an unyielding appetite for M&A, and that Comcast, with a market value of around $175 billion, has got plenty of ammunition for deals. So how will he throw his weight around in 2024, when streaming is about to get streamlined? In today’s issue, a deeper look at a hypothetical NBCU-WBD merger, and if Roberts will wade into the Paramount Global bake-off.

With the insight of my then-colleague, the legendary Rob Kindler, who has since renounced his banker days and is now back practicing law at Paul Weiss, Roberts decided to essentially make an unusual and rare hostile bid for a subsidiary. He announced a big offer for AT&T Broadband and put serious pressure on AT&T management and its board, as fiduciaries for AT&T shareholders, to at least consider Comcast’s bid.

It was a clever tactic and an insight into Roberts’ unyielding appetite for M&A deals. Though he was the son of Comcast architect Ralph Roberts, the entrepreneur who built the cable systems empire that mushroomed into the media behemoth, Brian rejected any sort of born-on-third base implications. He was immensely driven, aggressive, ambitious, and carnivorous.

Long story short, the ploy worked. AT&T had little choice but to test the market to see if anyone else would pay anything close to what Comcast had offered for AT&T Broadband. Absent any credible alternate buyer at a similar price, AT&T did what it had to do for its shareholders and negotiated a deal with Comcast and Roberts, which turned out to be the largest M&A transaction ever at that time. I remember leading a meeting of the Comcast executive team on the morning of September 11, at the Davis Polk office in New York, to discuss how the credit ratings agencies would react to the combination.

The Comcast executives had arrived by train that morning, and the meeting began despite the initial news of some kind of plane crash downtown. We had a discussion about what we thought the credit rating agencies would do about the merger. Only when the twin towers started falling did everyone decide to pack it in and pick it up another day. (I still have the slide deck from that fateful meeting.)

In other words, these are determined people. And, of course, it was a brilliant acquisition, cementing Comcast’s position as a premier distributor of content and laying the groundwork for the many Comcast deals that followed it. For instance, after Brian lost out to GE in buying Universal from Vivendi in 2004, he bided his time, telling GE C.E.O. Jeff Immelt, at every opportunity he had, that he wanted to buy not just Universal but all of NBCUniversal. They had six dinners together over the years and played golf 10 times. Each time, Immelt told Roberts he wouldn’t sell NBCU. Finally, in the wake of the 2008 financial crisis, when GE was on its proverbial death bed, Immelt decided to pull the trigger and to sell NBCU to Roberts unilaterally, without conducting an auction. (He had his reasons, none of them very good.)

Roberts got NBCU for around $30 billion, perhaps the greatest media deal of all time, as I have written before. At one point, pre-pandemic, one could argue that NBCU was worth $100 billion. Although it’s probably worth less than that today, it’s still proven to be a fabulous deal for Comcast (and a silly one for GE, but that’s another story, which you can read about in my bestseller, Power Failure.)

Steve Burke, who ran NBCU for Roberts after Comcast bought the company, once described Roberts as a “serial acquirer.” Not all the deals have worked out, of course. Roberts failed in his attempts to buy Disney in a hostile deal, in 2004. He then paid Disney back in kind by getting into a bidding war for Rupert Murdoch’s Hollywood assets, forcing Disney to overpay for them in a deal Iger & Co. are still struggling to digest almost five years later. Meanwhile, Comcast is still trying to digest Sky, the U.K. pay-TV provider it paid $40 billion for in 2018, after winning (or maybe, losing) a bidding war to Murdoch. (Big Media is a small world.)

Aside from being a highly skilled player in big-time M&A, Roberts is usually well-advised by Wall Street’s top bankers. And he’s got plenty of ammunition for deals. Comcast’s market value of about $175 billion puts it above Disney’s $165 billion. Its free cash flow, as primarily a distribution company, is several times greater than that of its entertainment industry peers. And Comcast’s stock has increased some 15 percent in the past year—not great by any means but better than the 4 percent decline that Disney has experienced. So, in my book, Brian is in a prime position to do deals—particularly in this important moment, when it seems like streaming is about to get streamlined, itself.

The floor valuation for Hulu was set in 2019 at $27.5 billion, so I would expect the $30 billion valuation is eminently reasonable, five years later. But if the two banks can’t agree, or their valuations aren’t within 10 percent of each other, then a third bank will be hired to break the impasse. (Taubman?) For what it’s worth, Rich Greenfield at LightShed puts the value of Hulu at $42 billion, meaning that Comcast would get $14 billion for its one-third stake. That seems too rich to me, but it underscores the fact that Roberts will likely have the most dry powder among the media crowd (unless you include the tech behemoths in the same cohort). Roberts has said he plans to use some of Disney’s cash to buy back Comcast shares, figuring—at the moment anyway—that that is the best investment Comcast can make.

But is it? That got me thinking (again) about what Roberts might acquire after he passes Go on the Hulu deal. It’s not going to be Paramount Global. There’s no way Comcast is going to spend $25 billion for Paramount—the equity plus the debt—only to then have to divest either CBS or NBC, and then possibly either Paramount or Universal, and be stuck with a bunch of sad-sack cable channels and a money-losing streaming business. Brian may sign an N.D.A. and kick some tires to make it look like he’s a player in whatever becomes of Paramount, but I don’t see Comcast trying to catch the falling knife that is Shari Redstone’s waning empire.

Warner Bros. Discovery, the company currently linking itself, via a head fake, to the Paramount corpus, remains the primo target for Comcast in a deal that marries NBCUniversal with WBD, with Comcast owning the majority of the combined company and with either Mike Cavanagh (the president of Comcast, who runs NBCU) or David Zaslav (C.E.O. of WBD) running the show. I know the folks in Philadelphia act all disinterested in this transaction, but I’m not ready to let it go yet—and I don’t believe they are, either.

My bet is that Brian will swallow hard and let Zaz run the combined company, at least initially, with some serious oversight provided by Cavanagh. Personally, I suspect Brian has bigger things in store for Cavanagh than just running the combined NBCU-WBD; he is probably going to be Brian’s successor, running all of Comcast one day. (Brian’s son Tucker, who is 33 and based in Los Angeles, runs a gaming division inside Comcast Spectacor, its professional sports team business.) Anyway, both Roberts and Cavanagh were at the Golden Globes taking some Oppenheimer victory laps, so one has to believe Comcast cares about Hollywood these days and must be thinking about how to remain an important player there.

Of course, per the rules of WBD’s acquisition of WarnerMedia from AT&T, Zaz is prevented from doing any strategic deal until after April. He is not precluded from thinking about or talking about a deal, though, before then. Thus, the strategic leak about Zaz’s lunch with Paramount Global C.E.O. Bob Bakish.

But I don’t think WBD is going to do a deal for Paramount. That’s just too much risk and too much debt for WBD to take on at this moment, since both are on the BBB cliff and in danger of toppling over it into junk land. But what better way to get Brian all hot and bothered than for him to think that Zaz might do a deal for Paramount instead of doing a deal with him for NBCU? Let’s face it, he can’t do both. He may not be able to do either. But the smarter strategic deal is the one that combines NBCU and WBD, with Comcast owning at least 51 percent at the start. It’s the same structure Brian used to buy NBCU from GE back in the day.

Rich Greenfield, at LightShed, offered the other perspective, suggesting that there will be no “legacy” media mergers in 2024. He wrote on January 7 that he does not think that combining big media companies with legacy TV assets will create value for shareholders. As for the long-debated NBCU-WBD hook-up, Greenfield wrote, “Given our belief that Comcast does not want to part with any portion of its theme park business, we believe the appeal of merging Warner Bros. Discovery with NBC Universal ex-Parks is limited. … Combining NBCU ex-Parks and WBD essentially creates an even larger linear TV company.”

Greenfield conceded that combining NBCU and WBD would “lead to significant cost savings from headcount reductions and enhanced streaming assets to expand the breadth of content and reduce both losses and the impacts of industry competition,” but still would not solve the problem of “an accelerating decline in the linear TV business, which would make up the overwhelming majority of earnings and cashflow.” He writes that “[l]egacy media companies need to reduce their exposure to linear TV and scale back their streaming ambitions, not double down on linear TV and keep trying to succeed in streaming, while relying heavily on cost savings.”

In order to break the tie, I turned to Tom Rogers, the longtime media executive and one of the creators of CNBC and MSNBC. He was once Zaz’s boss at NBC when GE owned the business. He was also one of the first people to advocate publicly for the wisdom of the combination of NBCU and WBD. How is he feeling about the combination these days, I wondered.

In short, like me, Rogers is of the view that Brian Roberts is not going to stay on the sidelines and watch other big media companies start dancing together without hitting the floor himself. “He believes he’s sitting in a position that is the best answer for other people who more desperately need an answer,” Rogers told me. “And there isn’t anything he sees that’s going to happen that’s going to take that away from him, which is why I think he’s got the leverage here.” (For its part, Comcast declined to share with me its current strategic thinking about possible deals, although Brian said on an October earnings call that “The bar is very high to do anything other than the plan we’ve got.” Cavanagh agreed, adding that “We don’t need to do anything inorganic acquisition-wise.”)

Rogers still thinks it’s more likely than not that NBCU and WBD merge into a new publicly traded company, as long as Comcast can control the combined entity and as long as Comcast can possibly keep the Universal theme parks business for itself. (Rogers noted that while Comcast may want to keep the theme parks, the spinoff’s financial viability might require a different solution.) Brian could even suck it up and allow Zaz to be the C.E.O. of the combined company, at least for a few years—Zaz will be 64 next week—as long as Comcast has the operational and governance control. In fact, making Zaz the C.E.O. might well be the price that John Malone and the Newhouses extract from Brian as part of allowing Comcast the controlling position in the combined entity, especially since they gave up their voting stock in WBD in order to make that deal happen back in April 2022.

Rogers agrees with me that it’s more likely that the lunchtime conversation between Zaz and Bakish was more of an opening salvo in a coming battle that will lead to the WBD/NBCU combination, rather than evidence of a serious desire on Zaz’s part to buy Paramount Global. Zaz had to get Roberts’ attention that the time had come to start dealing, what with April and the expiration of the Reverse Morris Trust rule only a few months away.

Rogers did raise with me an additional twist, although he says it’s a real long shot for many reasons: According to Tom’s hypothesizing, Zaz might be contemplating having WBD buy National Amusements, the Redstone family holding company, as a way of getting Shari’s voting control over Paramount Global without having to buy all of Paramount, at least not at the outset. (Gerry Cardinale at RedBird is considering the same idea, but a financial buyer is an even longer shot than a strategic buyer.) That would give Shari the cash she obviously wants—on the order of $2 billion for NAI as opposed to WBD stock, if WBD and Paramount were to merge—while also giving WBD some protection in the consolidation wars if Brian doesn’t step up and do a deal that combines NBCU and WBD.

In other words, Rogers posits, getting control of Paramount by buying NAI would give Zaz some leverage in the never-ending media battles in case a deal with NBCU can’t be worked out with Brian, or if it just proves too difficult to accomplish for any number of reasons. (It’s one of those deals you’ve really got to want if it’s going to happen.) If the preferred deal with NBCU does happen, then WBD could onsell its controlling stake in Paramount Global to somebody, somewhere (but only in the U.S.).

That’s all tremendously convoluted, of course, and given all of WBD’s debt, a WBD purchase of NAI could trigger the change of control provisions in the $11 billion of the Paramount senior notes, which would then defeat the purpose of buying NAI without buying Paramount. The truth, I think, is that neither Zaz nor Brian Roberts can afford to be dancing alone during this round of Big Media consolidation, and I think both men recognize that the other is the preferred dance partner, although Brian likes to seem all disinterested (like the clever negotiator he is). Whether or not they can work out a deal between themselves and with John Malone, who is always behind the scenes pulling one string or another, remains to be seen and will make the next few months utterly tantalizing.