Warner Bros. Reopens Talks, MSG Sports Talks Knicks, Rangers Spinoff | Bloomberg Deals 2/18/2026
Speakers
Chris Sheldon — Partner, KKR
— Chopping Block co-host
Summary
- M&A Supercycle 2026: Deal activity is accelerating with major consolidation in Media (Warner/Paramount) and Sports (MSG spinoff). Bankers are underwriting $100B in buyout financing but are desperate to syndicate risk quickly due to 2022 PTSD.
- The Great Software Schism: A massive divergence in "Smart Money" views on Software/SaaS. Apollo has cut software credit exposure to zero (fearing AI displacement), while KKR believes the sector is oversold (comparable to Energy in 2015) and sees opportunity.
- Private Equity Bifurcation: Firms reliant on IPO exits are stuck (IPO market frozen by volatility); firms with strategic exit paths (TPG) or private credit arms are outperforming.
- Crypto-to-AI Pivot: Bitcoin miners are being forced by activists to pivot infrastructure to AI Data Centers as mining profitability collapses.
Trade Ideas
Warner Bros (WBD) has reopened negotiations with Paramount (PARA). PARA has until Monday to find a better offer than the existing Netflix (NFLX) bid. A bidding war is active. PARA is the prize. WBD is desperate for scale. The floor is set by the NFLX offer; the ceiling is determined by WBD's desperation. WATCH/LONG. Arbitrage opportunity as the bidding war escalates. Regulatory antitrust blocking; deal falls through leaving PARA with weak fundamentals.
Activist investor Starboard Value is pushing Riot Platforms to transition from Bitcoin mining to an AI Data Center company. CEO admits Data Center business is worth more than crypto business. Bitcoin mining profitability has plummeted (BTC price down since Oct 2025). AI Hyperscalers need power and shell capacity immediately. Re-rating RIOT from a "commodity miner" multiple to a "data center infrastructure" multiple unlocks significant upside. LONG. Activist pressure forces the necessary pivot to higher-margin AI compute. Execution risk in retrofitting mining facilities for HPC (High Performance Computing).
Apollo (APO) has cut its exposure to software loans to zero, citing risk of business model disruption from AI. Conversely, Blue Owl (OWL) and Sixth Street have significant exposure (approx. 20% of portfolios) to software direct lending. Software stocks are down ~20% in a month. If SaaS cash flows degrade due to AI displacement (agents replacing seats), highly levered software companies will default. Apollo has immunized itself; Blue Owl is holding the risk. LONG APO (Risk management alpha) / AVOID OWL (Credit risk exposure). KKR's view (that software is oversold) proves correct and OWL collects high yields while defaults stay low.
KKR believes the credit market is "priced to perfection" but views the software selloff as an overreaction (similar to Energy in 2015). They are buying the dip in high-quality software credit. While Apollo exits, KKR is stepping in to buy distressed/oversold assets at attractive yields (9-10% cash-on-cash). Being the liquidity provider in a dislocated market generates alpha. LONG. Contrarian play on the software credit crunch. Apollo is right and the software business model is fundamentally broken, leading to defaults.
While generic software is crashing, panelists identify Cybersecurity as a "bright spot" that is not seeing the same level of selloff. AI agents and automation create *more* security vulnerabilities, not fewer. Security is non-discretionary spend, unlike mid-market productivity tools which are being displaced. LONG. Flight to quality within the software wreck. PANW specifically mentioned as falling on weak earnings forecast (idiosyncratic risk vs. sector tailwind).
Randall Williams
Sports Business Reporter, Bloomberg
MSG Sports board is exploring a spinoff to separate the New York Knicks and New York Rangers. The current market cap is ~$7B. Analysts estimate the Knicks alone would trade for ~$10B and the Rangers for ~$4B on the open market. The current conglomerate structure obscures a massive valuation gap (trading at ~50% discount to asset value). LONG. Pure sum-of-the-parts value unlock play. Deal execution failure; regulatory hurdles in sports ownership.
Up Next
This Bloomberg Markets video, published February 18, 2026, features Michelle Davis, Lauren (Bloomberg), Jim Zelter, Chris Sheldon, Nenad Milicevic, Randall Williams discussing PARA, RIOT, APO, KKR, PANW, CRWD, MSGS. 6 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Michelle Davis, Lauren (Bloomberg), Jim Zelter, Chris Sheldon, Nenad Milicevic, Randall Williams · Tickers: PARA, RIOT, APO, KKR, PANW, CRWD, MSGS