EY: Convergence, Digital Disruption to Boost Media M&A Activity


NEW YORK: The latest edition of EY’s Media & Entertainment Capital Confidence Barometer (CCB) has found that increased merger and acquisition activity in the sector will be led by digital disruption and convergence in 2017.

The 15th biannual survey reports that 31 percent of media and entertainment executives view convergence as being the number one disrupter in the business, and 67 percent see digital disruption as being the leading driver of cross-sector M&A deals.

John Harrison, EY Global Media & Entertainment Leader, Transaction Advisory Services, said, “Unprecedented, unrelenting advances in technology and the swift emergence of new platforms and services are driving change in consumer behaviors, upending long-standing media ecosystems and blurring sector lines. Companies are aggressively seeking the innovation needed to position for future success and are looking to acquisitions, alliances and joint ventures to catalyze transformation.”

The survey reports that 56 percent of execs plan to pursue acquisitions in the next 12 months, up from 46 percent six months ago. As such, EY expects an uptick in M&A activity in the first six months of 2017. Plus, 92 percent have stable-to-positive confidence in the number of acquisition opportunities, 85 percent in the quality of acquisition opportunities and 94 percent in the likelihood of closing acquisitions.

The majority of execs surveyed (73 percent) see the global economy as being stable or improving, but macroeconomic risks still exist. A rising concern for media execs is the emergence of populist movements worldwide. Political stability is seen as the most important risk to business by 27 percent of those surveyed. However, this is not causing companies to slow down cross-border investments, EY says.

Accessing high-growth regions and under-penetrated markets is a key factor for execs in determining M&A opportunities, with 42 percent eyeing cross-border acquisitions in the coming year. The top five destinations for 2017 will be the U.S., France, the U.K., Germany and China. Pre-Brexit, the U.K. topped the list.

“The M&E landscape has never been more interesting or dynamic,” said Harrison. “The pace of change is accelerating as media, entertainment, tech and telecom merge into a single ‘super sector’ of competitors and collaborators. Standing still is not an option.”