Mergers and acquisitions will be a top focus for M&E executives this year, according to a new report.
Mergers and acquisitions are top of the agenda again for a media and entertainment industry looking to accelerate growth and the move to digital.
That’s the top takeaway from a new report published by EY, which found that 59% of M&E executives now expect to actively seek M&A opportunities in 2019.
The figure, from EY’s Global Capital Confidence Barometer, is up from 42% in October 2018 and above the longer-term average of 47%.
The report offers an interesting look at an M&A market that seemed to show the squeeze on some areas of the industry in 2019.
Take, for example, the reunification of Viacom and CBS. Sumner Redstone had split the US broadcaster back in 2006 but following a long-running will they/ won’t they saga, the two brands united into what is now called ViacomCBS in December.
The aim, said the broadcaster, was to create “a premium content powerhouse with global scale” set to invest more than $13 billion in annual content, as it seeks to compete with competitive content offerings from the likes of Disney and Netflix.
Disney makes up 38% of the entire US box office take, according to figures from Box Office Mojo – a figure as high as 42% once you add in its acquisition of Fox.
In Europe, much broadcaster activity seems to be driven by that same desire to scale, as well as share technologies in areas such as streaming services.
Italian broadcaster Mediaset SpA purchased a 9.6% holding in Germany’s ProSiebenSat.1 Media SE for $380m in May 2019, for example; both are already members of the European Media Alliance network that is seeking to attract advertisers to a common digital platform while sharing the costs of its development.
According to the EY Barometer, deal value is expected to remain high – with almost two-thirds of executives expecting more deals valued at over $10 billion.
Looking at why M&A is so high up on the agenda, EY global transactions media and entertainment leader Will Fisher writes: “Companies are looking to M&A to navigate barriers to growth, as 60% of executives expect their M&A pipeline to increase in the next 12 months, up from 40% in October 2018.”
Hiring staff is seen as another key challenge, with 63% of executives reporting difficulty in this area. Acquisitions, EY adds, are being driven in part by strategic talent acquisition as deal making offers companies “the optionality” they need to respond to evolving challenges.
The M&A activity won’t be limited to the big studios either. 2019 has already seen Riedel Communications agree a deal to acquire Canada-based IP video processing firm Embrionix.
- Read more: Riedel acquires Embrionix for IP expertise
Both companies provide tools for signal transport and processing. Riedel said the deal would strengthen its expertise in IP-enabled hardware and software and broaden its portfolio of video solutions.
This followed the end of year acquisition of Audiotonix, which includes brands such as Calrec, Allen & Health and DiGiGo, by private equity firm Ardian in December.