Demand for Streaming Content to Drive M&A Activity

Research from PwC indicates that deal activity in the media and entertainment space will continue at a “vigorous pace” in 2022, powered by the demand for content from streaming platforms, 5G rollouts and strong interest from private equity buyers.

In 2021, there were 804 M&A deals in the media and telecommunications sector, a 27 percent gain on 2020, with deal value at $233 billion, driven by high-profile content acquisitions and special purpose acquisition company (SPAC) transactions.

“Major media companies are doubling down on content to fill their streaming offerings,” PwC notes. “The planned merger of WarnerMedia and Discovery along with Amazon’s pending acquisition of MGM Studios illustrate how crucial content libraries are in order to be competitive in the streaming world. We expect that will lead to further consolidation as other streaming providers and studios seek scale.”

Producers have become increasingly valuable, PwC continues, referencing the recent deals for Hello Sunshine, Moonbug Entertainment and Endeavor’s scripted content division.

Private equity accounted for 37 percent of M&A deals last year, at a deal value of $104 billion. “As media and telecommunications companies reevaluate their business models and sell off non-core assets, we expect to see private equity firms continue to be major players in the sector in the coming years.”

Deal activity is expected to continue to be strong this year, but potential interest rate increases or tougher regulatory stances could slow down activity, PwC indicates.

“With Discovery’s acquisition of WarnerMedia, we’ve reached a turning point where the last of the big telcos have seemingly abandoned their content/entertainment strategy in favor of strategic investments to their infrastructure to position themselves for future success,” said Bart Spiegel, media and telecom deals partner at PwC.