Media Mergers Fall 23% in Third Quarter (Study)
Entertainment, media, and communications companies hit the breaks on major mergers and acquisitions during the third quarter of 2016, according to a new report by PwC. Maybe it’s uncertainty over the outcome of the U.S. presidential election, but whether its political concerns or just a failure to find any assets attractive, many conglomerates took a wait-and-see approach over the three-month period ending in September.
There were 145 pacts over the period, a 23% decline from the previous quarter. The mergers that were announced didn’t carry the same gaudy price tags. The value of these proposed unions fell 53% to $19.2 billion. Those numbers don’t take into account one mega-deal. AT&T’s proposed $85.4 billion purchase of Time Warner is the biggest deal of the year, but was unveiled in October.
The splashiest deal in the third quarter was Verizon’s $4.8 billion pact for Yahoo. Other significant deals included private equity company TPG Capital’s $1.6 billion acquisition of cable company RCN Corp., business information provider Informa’s $1.4 billion play for Penton Information Services, and Walt Disney’s $1 billion minority stake in video streaming company BAMTech.
PwC expects China to continue to be a motivated buyer in the coming years. Companies such as Dalian Wanda and Alibaba have been very active in the entertainment space, buying up assets such as AMC Theatres and Legendary Entertainment in the case of Wanda, or investing in movie productions, as Alibaba has done with “Star Trek Beyond” and “Teenage Mutant Ninja Turtles: Out of the Shadows.”
“Chinese buyers have been more active this past year and they’ve gotten much smarter about what transactions will be problematic from a [government] review perspective,” said Todson Page, U.S. Technology Deals Leader.
Entertainment and media deals may have cooled off, but the technology sector was a hotbed of activity. There were 347 deals, a 26% jump from the previous quarter, with the value of these pacts climbing 89% to $102.5 billion. As the deal between AT&T, a phone company, and Time Warner, a media conglomerate, demonstrates, old barriers between device makers and content creators may be eroding.
“Companies are focusing on where they need to be in the next five to 10 years,” Page said. “There’s going to be more of a convergence between entertainment media and technology space.”
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