There were 159 M&A deals in the media and telecoms sector in the U.S. in Q2, up from 155 in the first quarter, with overall deal value rising from $6.7 billion to $36.6 billion, according to PwC.
Meanwhile, overall deal volume in the first half of the year is down considerably from last year, falling from 439 to 314, while overall deal value dropped from $82.4 billion to $43.3 billion.
PwC’s Q2 2019 Deals Insights notes, “While Q1 2019 saw no megadeal activity, several megadeals in Q2 2019 highlight the shift to a personalized entertainment & media environment, where consumers want greater control of how and when they consume content and experience media.”
Significant deals in Q2 include Sinclair Broadcasting Group’s announced acquisition of 21 Fox regional sports networks from The Walt Disney Company and Altice USA’s planned acquisition of the millennial-focused financial news network and OTT platform Cheddar.
The most active sectors for M&A activity in Q2 were advertising/marketing and internet/information, representing 35 percent and 27 percent of total deal volume, respectively. The biggest deals, however, were in telecommunications and broadcasting. “Film/visual content decreased in deal volume but the Q2 2019 deals demonstrated the power of the OTT platforms, with Hulu’s buyback of AT&T’s shares and Altice USA’s acquisition of Cheddar,” PwC says.
Of the 155 deals in Q2, 33 were with foreign acquirers of U.S.-based targets—led by the U.K. and Canada—totaling $18.9 billion in announced deal value. There were 47 outbound deals totaling $848 million, more than half (62 percent) being in Europe.
“The ‘great unbundling’ is underway and is transforming when and how we consume media,” PwC says of trends in film and visual content. “Consumers are choosing to curate their own personal selection of channels via over-the-top (OTT) services rather than with traditional packages of channels. While content has historically been the key factor behind acquisitions in the film/visual content sub-sector, 2019 has seen content platforms driving much of the deal activity. In Q2 2019, Hulu bought back AT&T’s 10 percent stake for $1.4 billion, while Disney reached a deal with Comcast to buy the remaining minority interest within the next five years for at least $5.8 billion. Meanwhile, Viacom acquired linear TV streaming platform Pluto TV for $340 million and Altice USA acquired millennial-focused news platform Cheddar for $200 million in Q1 and Q2, respectively, illustrating that there is room for a diversity of content in the great unbundling.”