PwC: M&A Deal Value Rose 90 Percent in 2014

NEW YORK: The value of M&A deals in the U.S. media sector rose 90 percent last year, led by two "megadeals" that are set to "serve as a catalyst to reshape the future entertainment, media and communications landscape," according to PwC.

According to PwC’s US Entertainment, Media & Communications (EMC) Deal Insights report, there were 890 mergers and acquisitions in the EMC sector in 2014, up slightly from the 866 the year before. In the first half of the year, megadeals valued at $1 billion or more accounted for more than 90 percent of the overall deal value. The megadeals slowed down in the second half, with PwC attributing this to companies taking a wait-and-see approach as big takeovers awaited regulatory approval or shifting their focus to their digital strategies. The Comcast/Time Warner Cable and DIRECTV/AT&T deals accounted for more than 50 percent of the overall $94 billion deal value in 2014.

Commenting on the megadeals of 2014, PwC notes: "Numerous transformational deals were announced that will likely serve as a catalyst to reshape the future EMC landscape across several sub-sectors, the impact of which will be felt by consumers for a long time to come. All this comes in the face of significant legislative and regulatory matters surrounding spectrum, net neutrality, ownership rules and more."

PwC expects M&A activity to continue this year "as market participants take risks to position themselves for the future EMC marketplace, which focuses on subscriber stickiness, efficient and well optimized networks, and creating and maintaining the rights to compelling content. EMC companies are reinventing the way they deliver to meet customers' changing expectations and habits, resulting in partnerships/mergers across industries, often with emerging technologies and distribution platforms, such as multi-channel networks (MCNs), wearables, etc. These companies will continue to engage in landscape shifting deals as they figure out their digital strategy and how to remain relevant to the digital consumer."

The report also found an increase in international investment from the U.S. EMC sector last year, with a 20-percent rise in outbound activity. The U.K. led the pack, accounting for 24 percent of deals, followed by Canada (13 percent). Also in the top five were Australia, Brazil and China.