Building a quick media company valuation multiple check

# Building a quick media company valuation multiple check

In 2022, Amazon paid roughly $8.5 billion for MGM, a price that implied a rich multiple on a studio with a slim content library outside its James Bond and library titles. A year earlier, Discovery and WarnerMedia merged in a deal valuing the combined entity around $43 billion in equity plus assumed debt. Every banker, activist investor, and journalist covering these deals reached for the same shorthand: EV/EBITDA and, increasingly, EV/subscriber. This lesson shows you how to build that sanity check yourself in under five minutes.

Why EV, not market cap

EV (Enterprise Value) is the theoretical takeover price of a company: market capitalization plus total debt, minus cash and cash equivalents. It matters in media because studios and networks carry different capital structures. Two companies with identical market caps can have very different debt loads (think Paramount Global's historically higher leverage versus a lighter balance sheet at a pure streaming challenger). EV normalizes for that, which is why it is the numerator in almost every media M&A multiple.

Common pitfalls when applying these multiples

Mixing trailing and forward EBITDA. A deal priced at "8x EBITDA" could mean trailing twelve months or a forward projection assuming cost synergies. These can differ by 20% or more, materially changing the read. Always ask which one is being quoted.

Ignoring content amortization policy differences. US studios and European broadcasters sometimes amortize content costs on different schedules (straight-line versus accelerated based on expected viewership). This changes reported EBITDA even for economically similar businesses, so cross-border comparisons need care.

Treating subscriber counts as equal quality. A Netflix subscriber in the US (higher ARPU, estimate in the mid-teens USD per month as of recent reporting) is not equivalent to a subscriber in a lower-ARPU emerging market bundle. Always pair EV/Subscriber with ARPU context before comparing across companies or regions.

Forgetting regulatory drag. In Europe, deals involving broadcasters often require review by national media regulators (such as Ofcom in the UK) or the European Commission under EU merger control rules, which can affect deal timing and, indirectly, the multiple a buyer is willing to pay for regulatory risk. In the US, the FCC (Federal Communications Commission) reviews broadcast license transfers, adding a similar layer of scrutiny.

Putting it together as a two-minute checklist

1. Pull EV (market cap + debt − cash) and TTM EBITDA from the target's latest annual report or investor deck.

2. Divide to get EV/EBITDA. Place it against the relevant sub-sector band (linear, diversified, pure streaming).

3. If subscriber-based, divide EV by subscriber count and compare to recent comparable transactions.

5. If the target spans linear and streaming, consider whether a sum-of-the-parts view changes the picture.

Key Takeaways

EV/EBITDA is the core media valuation multiple because it neutralizes capital structure differences and adjusts for heavy non-cash content charges.

Sector bands (estimates, 2026): legacy linear roughly 5x to 7x, diversified media roughly 7x to 10x, premium streaming 15x plus, studio/library deals often above sector average due to licensing optionality.

EV/Subscriber is a useful cross-check for pay-TV and streaming assets, but must be paired with ARPU context to mean anything.

Always verify whether a quoted multiple uses trailing or forward EBITDA, and check content amortization policy before comparing companies across the US and Europe.

Building a quick media company valuation multiple check

Why EV, not market cap

The benchmark range to know

Worked example: sanity-checking an asking price

Reading the paramount and MGM signal

Common pitfalls when applying these multiples

Putting it together as a two-minute checklist

Key Takeaways