AI Still Dominates as Media VC Deals Fell 69% to $165 Million in First 2 Months of 2026

Venture capital valuations in media fell 69% in the first two months of 2026 from a year ago, according to new data from PitchBook, signaling a difficult year ahead for media and publishing companies as investors in this area take an “AI-first” approach. 

There was $165 million worth of VC dealmaking activity across January and February in the media sector, down from the $529.12 million during the same two-month period a year ago, according to the firm.

January had 25 total deals valued at an aggregate of $48.8 million, compared to 37 deals valued at $390 million a year ago. February had 22 deals total valued at an aggregate of $115.8 million, compared to 23 deals valued at $139.3 million a year ago. 

When taking a broader look across entertainment software, publishing, media and information during the two-month period, there was a total of $760 million in VC deal activity, down from $3.4 billion during the same period a year ago, which was primarily driven by the augmented reality-focused startup Infinite Reality. January made up the lion’s share with 40 total deals valued at an aggregate of $435.3 million, while February had 16 total deals valued at an aggregate of $325.2 million. 

“AI is the story of venture at the moment, and companies that are able to harness that story and drive better content will be able to raise, but it’s going to be a challenging year,” PitchBook’s director of VC research Kyle Standofrd told TheWrap.

“Whether that be video, image, written text or a mix, the ability to create targeted, high-quality content for end users is a big area of growth. Content is ubiquitous across industries, so for investment, the opportunity to create large companies or help companies drive revenue through automated content is enormous.” 

Stanford says that the decrease in deal values over the past year signals that the VC market is “trying to decide how best to approach these companies as the capabilities of AI accelerate.”  

“Every market is moving to AI-first for VC investment,” he added. “For the entire U.S. market, AI investment represented 10% of deal count a decade ago. Now it is 40%. That type of growth is going to change every industry, and it’s something we expect to continue accelerating.”

As for M&A deals, Paramount’s pending takeover of Warner Bros. Discovery and Apollo Global Management’s buyout of Clear Channel Outdoor Holdings were the largest by size.

Read on for the full breakdown.

“AI is the story of venture at the moment, and companies that are able to harness that story and drive better content will be able to raise, but it’s going to be a challenging year.” – PitchBook

VC Investments: Lead the Future, Semafor and Big Shot Pictures top January and February

In the AI sector, Arena, a company that allows users to compare large language models through head-to-head matchups, received the largest VC investment of the month, raising $150 million. Andreesen Horowitz and Kleiner Perkins are among its investors. 

“We cannot deploy AI responsibly without knowing how it delivers value to humans. To measure the real utility of AI, we need to put it in the hands of real users,” Arena co-founder Anastasios Angelopoulos said in a statement. “This funding accelerates the scientific work and community insights that make live evaluation from real users the gold standard for assessing AI in practice.”

Benjamin Horowitz and Marc Andreesen are also investors in Leading the Future, a super PAC focused on lobbying for policies friendly to the AI industry, which raised $125 million. Its other investors include OpenAI president Greg Brockman and Palantir Technologies co-founder Joseph Lonsdale. 

In the media sector, Ben and Justin Smith’s Semafor hit a $330 million valuation after raising $30 million in January. The move came on the heels of the outlet reaching a full year of profitability just three years after launch, with $40 million in revenue and $2 million in EBITDA. Investors include Antenna Group, KKR co-founder Henry Kravis, Carlyle Group’s David Rubenstein and Penny Pritzker’s PSP Partners, among others.

“The proof is in the numbers: We’ve set a new historic standard for the global news industry at a time when it is more challenged than ever,” Justin Smith said in a statement. “With this successful, profitable model in place, we will aggressively invest in our global journalism and convening platforms in the U.S. and around the world.”

Meanwhile, former Paramount co-CEO Brian Robbins’ new venture Big Shot Pictures raised  $100 million from CAA, Greycroft, MarcyPen Capital Partners, Sony Pictures Television and ValueAct Capital Management.

The new company will focus on making animated and live-action content for YouTube with plans to evolve the projects into theatrically released feature films. It has acquired the rights to Kay Thompson’s “Eloise at the Plaza,” the children’s book series about a six-year-old who lives at the legendary New York City hotel.

“We will build for how kids actually discover and connect today,” Robbins said in a statement. “The opportunity couldn’t be more clear to us, and the time is now. From reimagining timeless IP to discovering the bold, original ideas by emerging creators, we will work with the most talented artists to bring these stories to life.”

Other VC investment highlights for the period include:

• Novig, a sports betting exchange that allows users to trade without a traditional bookmaker, which raised $75 million – bringing its total capital to more than $105 million
• “Heroes vs. Hordes” and “Baseball 26” publisher Ares Interactive, which raised $70 million
• Clubs Poker, an online poker website, which raised $51.5 million 
• Bluff, a crypto betting startup, raised $21 million

M&A Deals: Warner Bros. Discovery- Paramount leads as largest deal by size

David Ellison’s pending $110 billion takeover of Warner Bros. Discovery, which came after Netflix shockingly pulled out, was the largest media M&A deal in PitchBook’s roundup. 

Paramount will pay $31 per share in cash to acquire 100% of WBD’s total outstanding shares. The transaction is funded by $47 billion in equity, fully backed by the Ellison Family and RedBird Capital Partners, though it may include other strategic and financial partners at closing. The deal also includes $54 billion of debt commitments from Bank of America, Citigroup and Apollo.

The deal will bring together streaming services Paramount+, Pluto TV, BET+, HBO Max and Discovery+, dozens of linear networks like CBS, CNN, HBO, TNT, Comedy Central and MTV, and two of the five major film studios under the same roof. It is expected to close by Sept. 30, pending shareholder and regulatory approval. 

Other deals include:

• Travel and media company NextTrip’s acquisition of free ad-supported streaming network GoUSA TV for $350,000 in cash and $350,000 in restricted common stock
• Illinois-based SpoonRiver Media’s acquisition of local radio station 92.9/107.5 The Vibe for $70,000.

Entertainment, software and publishing deals: 

In the sector of entertainment software, publishing, media and information, Apollo Global Management led the way with a $6.2 billion buyout of the out-of-home advertising firm Clear Channel Outdoor Holdings.

Also notable was Mattel, which acquired full ownership of the Mattel163 mobile games studio after buying out NetEase’s 50% stake for $159 million. Since its inception in 2018, Mattel163 has released four games based on Mattel IP — “Uno!,” “Uno Wonder,” “Phase 10” and “Skip Bo” — with approximately 20 million monthly active users and over 550 million downloads worldwide. 

Rounding things out were Maven Equity Partners and Trilogy Search Partners’ $85 million acquisition of email, text and CRM solutions firm Message Digital and ETTS AI Investment’s $2.3 million acquisition of iPower Inc.’s Global Product Marketing.

This report is a partnership between WrapPRO and PitchBook , the go-to financial data and software platform that provides detailed information on private and public capital markets.

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