Selling a media company is a major financial event. Whether you run a digital publisher, video production firm, podcast network, or content studio, the deal structure and tax implications can dramatically affect your final payout. Understanding the taxes on selling a media company can help you avoid costly mistakes and walk away with more money in your pocket.

At Merge, we work closely with founders to structure tax-efficient deals and prepare for the financial realities of an exit. In this comprehensive guide, we’ll break down how taxes apply when you sell your media company, what strategies can help reduce your tax burden, and what you need to prepare for a smooth, profitable exit.

Why Taxes Matter in Media M&A

For most founders, selling a business is the biggest payday of their career. But taxes on selling a media company can eat up 20%–50% of your total proceeds depending on how the deal is structured and where you live. Understanding the rules early—and planning for them—is one of the smartest moves you can make.

Here’s why it matters:

  • Not all income is taxed equally. Capital gains, ordinary income, and depreciation recapture are taxed at different rates.
  • Deal structure drives taxes. The way your media company is sold (asset vs. stock sale) has a major impact.
  • You have planning opportunities. With the right advisors, you can structure the deal to reduce taxes and protect wealth.

Step 1: Determine Your Entity Type

The taxes on selling a media company vary based on your legal entity structure:

LLC (Pass-Through)

  • Profits “pass through” to owners
  • Typically taxed at long-term capital gains rates (15% or 20%) on goodwill
  • May also include ordinary income on certain assets (e.g., work-in-progress contracts)

C-Corp

  • Separate legal and tax-paying entity
  • Double taxation may apply: once at the corporate level and again at the shareholder level
  • However, qualified small business stock (QSBS) can offer huge tax breaks (more on that later)

S-Corp

  • Pass-through entity like an LLC
  • But more restrictive in ownership and share structure
  • Tax treatment is similar to LLC in most sales

Action Step: Know your current entity status and ask your CPA if a restructuring before sale would unlock tax savings.

Step 2: Asset Sale vs. Stock Sale

The biggest factor affecting taxes on selling a media company? Whether the buyer is purchasing assets or stock.

Asset Sale (More Common for Small Media Companies)

  • Buyer purchases individual assets (e.g., IP, contracts, equipment)
  • Each asset class is taxed differently
    • Goodwill: taxed as long-term capital gains (15% or 20%)
    • Depreciated assets: may trigger depreciation recapture (taxed as ordinary income)
    • Non-competes and consulting agreements: taxed as ordinary income
  • More complex allocations = more tax categories

Stock Sale (Preferred by Sellers)

  • Buyer purchases ownership shares
  • Entire amount typically taxed as long-term capital gain
  • Simpler tax treatment, but buyers may avoid stock sales due to liability risks

Merge Tip: Push for a stock sale if possible. If not, negotiate favorable asset allocation and secure strong tax counsel to minimize ordinary income portions.

Step 3: Understand Capital Gains vs. Ordinary Income

A common mistake when navigating taxes on selling a media company is assuming the whole payout is taxed at favorable capital gains rates. Not so fast.

Long-Term Capital Gains (15% or 20%)

  • Applies to sale of goodwill, brand equity, and business interest held over one year
  • The bulk of your payout may qualify if structured right

Ordinary Income (Up to 37%)

  • Applies to:
    • Consulting agreements
    • Non-compete payments
    • Depreciation recapture
    • Earnouts tied to continued work post-sale

Action Step: Break down your estimated payout into categories. Your advisor should help forecast tax liability across each bucket.

Step 4: Explore QSBS (Qualified Small Business Stock)

QSBS is a game-changer when it comes to taxes on selling a media company—but only if you qualify.

What is QSBS?

  • If you own C-Corp stock in a qualifying business for at least 5 years
  • You may be able to exclude up to $10 million (or 10x your basis) in capital gains

Key Requirements:

  • C-Corp (not LLC or S-Corp)
  • Less than $50M in assets at time of stock issuance
  • Active business (not investment holding)
  • You received the shares directly (not bought second-hand)

Real-World Win: A podcast network founder qualified for QSBS and paid zero tax on a $4.5M exit.

Merge Tip: Ask your CPA if a C-Corp conversion now could qualify you by the time of your future sale.

Step 5: Plan for Earnouts and Contingent Payments

If part of your payout depends on future performance, timing matters for taxes.

How Earnouts Are Taxed:

  • Typically taxed when received (cash basis)
  • May be treated as capital gain or ordinary income based on structure

Planning Tips:

  • Try to structure earnouts around business performance (capital gain)
  • Avoid tying them to your personal work post-close (ordinary income)
  • If you stay involved, separate employment income from sale proceeds

Merge Tip: We help founders negotiate earnouts that balance tax efficiency with upside protection.

Step 6: State and Local Tax Considerations

Your state matters. Taxes on selling a media company can be affected by:

  • Your state of residence (where capital gains are taxed)
  • Your company’s incorporation location
  • Where your income is sourced (especially with remote teams)

For example:

  • California: 13.3% capital gains tax (no preference for long-term)
  • Texas/Florida: 0% state income tax

Action Step: Before you sell, talk to your tax advisor about potential state residency moves (if practical).

Step 7: Reduce Taxes With Pre-Sale Planning

Planning ahead can reduce taxes on selling a media company. Strategies include:

Installment Sale

  • Spread payments over several years to avoid bracket spikes

Donor-Advised Funds

  • Donate part of your business pre-sale for a charitable deduction and avoid gains on that portion

Family Trusts

  • Transfer equity to heirs or trusts at a lower basis

C-Corp Rollover Equity

  • If rolling equity into a newco, defer some gains until second exit

These advanced strategies require early action—ideally 6 to 12 months before you go to market.

Step 8: Work With the Right Advisors

Your exit team matters. For a tax-optimized exit, we recommend:

  • M&A Advisor (like Merge): to help structure the deal and educate buyers
  • Transaction CPA: with specific M&A experience
  • Deal Attorney: to draft and negotiate favorable terms
  • Wealth Advisor: for post-sale planning

Taxes on selling a media company are complex. The right people will help you keep more of your hard-earned value.

Final Thoughts

If you’re planning to sell your content agency, media brand, or creative studio, taxes shouldn’t be an afterthought. From entity type and deal structure to state rules and advanced strategies, the taxes on selling a media company can significantly affect your proceeds.

At Merge, we help founders navigate this process from start to finish—with white-glove support, strategic guidance, and a team of experienced partners. Ready to plan a tax-smart exit? Let’s talk.