PwC: Digital, Content Libraries to Lead Deal Activity in Media Sector

NEW YORK: PwC is predicting "robust" deal activity in the entertainment, media and communications (EMC) sector in the U.S. this year, driven by the need for spectrum and access to deep content libraries and interest in international broadcast assets.

“EMC companies are re-evaluating their current portfolios and proactively executing on strategies that address the consumers’ shift to digital consumption,” said Bart Spiegel, PwC’s U.S. entertainment and media deals partner. “This may translate to monetizing certain assets in the near term to provide capital for their go-forward strategy. Additionally, established market players are looking outside the U.S. for opportunities to leverage their existing asset base and increase their scale and reach to a global audience.”

With consumer demand for bandwidth increasing, communications operators will be looking at merger and acquisition opportunities to gain spectrum, geographic reach, customers and wider service portfolios. EMC companies will also be looking to companies with established content libraries that can be exploited on multiple platforms. PwC also notes that U.S. companies will continue to look for opportunities overseas, particularly broadcast assets. China, Brazil and Turkey are expected to be key targets given the high growth prospects for their media businesses. Divestitures will also be key to deal activity this year, PwC says, as more companies seek to monetize their investments and exit non-core assets, especially in the publishing segment. PwC also predicts that tech companies will continue to invest in the entertainment and media business.

“More than any other sector, EMC companies are ahead of the pack in pursuing deals, partnerships and joint ventures to address the accelerated pace of change in consumer behavior," added Spiegel. "Media companies are investing in robust content management systems and dynamic analytics to not only operate efficiently but also to take advantage of new opportunities."

EMC deal volume declined from 931 in 2011 to 839 in 2012, but deal value increased from $55 billion to $96 billion. Cable deal value increased from $3.4 million in 2011 to $9.1 million in 2012. Film and content deal value increased from $1.1 billion in 2011 to $9 billion in 2012, led in part by Disney’s purchase of Lucasfilm. Broadcasting deal value increased from $2.7 billion in 2011 to $5.8 billion in 2012, led largely by NBCUniversal’s divestiture of its A+E Networks stake.