EY Report Sees More Consolidation in Media, Entertainment Sector

NEW YORK: Confidence in the global economy, digital media innovation and readily available credit are among the factors set to drive further consolidation in the media and entertainment business this year, according to a new study from EY.

More media and entertainment firms will pursue strategic growth through M&A activity in the next year than at any time in the last two years, EY indicates. According to EY's Capital Confidence Barometer: Media & Entertainment, 64 percent of media and entertainment execs believe the global economy is improving, as compared with 59 percent a year ago. In addition, confidence in the availability of credit and financing is at its highest level in five years.

"Media and entertainment companies have significantly increased their borrowing the past year, which indicates a combination of greater deal-making activity, paying down debt and returning capital to shareholders," said Tom Connolly, EY's global media and entertainment transaction advisory services leader. "This increased availability of credit and growing confidence in key economic indicators shows that more media and entertainment executives plan to pursue acquisitions now more than at any time in the past couple of years. However, they need to move quickly—with fewer assets on the market, valuation gaps will widen."

The survey also found that 65 percent of respondents believe deal volume will rise in the coming year, 52 percent believe that the deal values in the next year will be above $251 million, and 34 percent intend to pursue acquisitions in the next 12 months.