PwC Forecasts Rise in Media M&A Activity

NEW YORK: Merger and acquisitions activity in the entertainment and media sector is expected to rise this year, according to PwC, spurred by OTT and social-networking companies, as well as online gaming firms.

“The lines between media and technology are blurring as technology companies are quickly changing the media landscape and challenging existing business models of traditional E&M companies,” said Bart Spiegel, PwC’s U.S. entertainment & media transaction services partner. “Additionally, the expected IPOs from social media companies may allow them to exert greater E&M market influence. With increasing interest from non-traditional E&M players, E&M companies will need to be more aggressive in pursuit of deals as new market entrants increase competition for prime companies."

The PwC report indicates that E&M deal value rose to $52 billion in 2011, thanks to the $27.3 billion Comcast/NBCU merger. Without this, M&A transaction value was essentially flat. Deal volume last year fall 14 percent to 687. U.S. companies investing overseas resulted in 46 completed deals worth $5.4 billion, up from 36 in 2010. As of December there were 31 pending international deals for U.S. companies, valued at $5.3 billion.

Access to content will be a key factor in M&A decisions in 2012, the PwC study reports. “Content acquisition has risen to the top of the agenda with the accelerated adoption of digital media consumption and the rise of over-the-top services,” said Thomas M. Rooney, PwC’s U.S. entertainment and media transaction services leader. “Companies are primed to seek out domestic and international targets to expand their libraries and push their content internationally as the shift to digital unfolds.”

For U.S companies, another key area will be international TV and cable markets. PwC also sees online gaming as an arena that could present opportunities for corporate and financial buyers. “The legalization of online gaming could be a real game changer in 2012 if state regulators move rapidly to establish online gaming regulations," Spiegel said. "Land-based casino operators, gaming manufacturers and suppliers, and social media are all watching these developments closely and will move aggressively to stake a first-mover advantage in this potentially lucrative market."