Tech, Media Convergence Fuels U.S. M&A Activity

In the third quarter of this year, there were 260 M&A deals in the U.S. media and telecoms space, according to PwC, a 9-percent gain on the year-ago period.

Q3 deal activity, marking a two-year high, was 34-percent higher than the second quarter, according to PwC’s US Media and Telecommunications Deals Insights report. However, deal value fell to $19 billion, 43-percent lower than a year ago and 58 percent less than Q2. The quarter closed with five deals greater than $1 billion but none greater than $4.8 billion.

“Even without the force of megadeals, however, the sector had its fair share of attention-grabbing headlines, as companies made bold moves to acquire capabilities, expand portfolios and build scale,” PwC said. “We saw the emergence of a new trend in audio content deals with the flurry of activity around podcast providers. We saw the blurring of lines move beyond technology vs. media and penetrate sub-sectors in between, such as advertising and content. We saw companies make innovation the forefront of their acquisition strategy. If the sheer volume of deals this quarter isn’t indication enough, the strategic rationale underlying the deal activity in some of our most active sub-sectors highlights the continued importance players are putting on M&A to further their position in this competitive and ever-changing landscape.”

The period saw a two-year high in inbound deals (international companies investing in the U.S.), with 40 in the quarter, 15 percent of total volume, led by Canada. International investments by U.S. companies, however, hit a two-year low at 38.

The insights report includes commentary on “Convergence 3.0—the confluence of new technology, capabilities and heightened consumer expectations. Convergence is not only challenging TMT players to compete along every point of the value chain, but also to build engaging, trustful relationships directly with the consumer.”

PwC continues, “As competition builds for engagement and advertising dollars, many of the strategies we hear companies talk about center around innovation—from finding new revenue streams or new ways to monetize users, to developing new platforms and new ways to provide a personal and immersive experience to the consumer using the power of data.”