PwC: “Megadeals” are Transforming M&A Landscape


According to PwC, 2017 was another “massive” year for merger and acquisition activity in the U.S. media and telco landscape, with deal volume up 29 percent.

There were 876 M&A deals in media and telecoms in the U.S. last year, with a total value of $138.8 billion, down 31 percent on the previous year. The year saw 18 deals valued at more than $1 billion, and three at $5 billion or more, led by Disney’s $68.4 billion agreement for much of 21st Century Fox. The other megadeals last year were Discovery buying Scripps and, in the telco space, the pact between Crown Castle International and Lightower Fiber Networks. The megadeals accounted for 63 percent of deal value last year.

“Given the robust deal market in 2017, we expect 2018 to be another banner year as companies look to expand on their capabilities and portfolio,” said Bart Spiegel, deals partner for U.S. media and telecommunications at PwC. “Many of the deal theses underpinning 2017 M&A will continue into 2018.”

In film/content there were 67 deals, generating a value of $74.1 billion, with 37 in broadcasting ($18.5 billion) and 7 in cable ($3.1 billion). Advertising and marketing was the biggest segment by deal activity; film/content was the biggest in terms of value.

“As content holds its place as ‘king’ in the industry, we expect 2018 will likely bring even more M&A activity, whether it be for content libraries themselves or the pure capabilities and scale to produce content,” PwC said.

Cross-border deals were dominated by U.S.-based buyers, with acquisitions involving international companies falling to 14 percent last year from 22 percent in 2016. The largest volume of foreign investments in U.S.-based outfits was from Europe, with the U.K. taking the lead.

Looking ahead, one of the key drivers of M&A will be emerging technology, notably AI. “While the media and telecommunications industry is facing a level of uncertainty concerning the speed of change in areas such as AI, we expect companies that use the technology to innovate will likely garner interest from acquirers,” PwC said.

Authentic user experiences are also crucial. “Ultimately, tomorrow’s leading companies will recognize that growth depends on getting much closer to the consumer, allowing them to seamlessly introduce new product offerings and technologies. Content and distribution are clearly important, but they are not enough. Who are tomorrow’s winners, and who will become attractive acquisition targets? It’s the companies that focus on creating a compelling user experience, and have an ability to pivot or reinvent themselves as the media and telecom environment evolves.”

Megadeals will continue to dominate headlines this year, PwC reports. It also expects increased deal activity in internet-driven segments, including OTT around the world.