Report: M&A Activity Surges 75 Percent in Entertainment and Media
Mergers, acquisitions and other deal activity in the entertainment, media and communications industries in the U.S. increased to $96.2 billion in 2012 from $55 billion the year before, even as the volume of deals fell from 931 to 839, according to a PricewaterhouseCoopers report due Tuesday.
The jolt was primarily due to a $20.1 billion Softbank/Sprint deal. Other big deals included Disney/Lucasfilm and acquisitions of AMC Entertainment Holdings and the Los Angeles Dodgers.
The report also predicts robust M&A activity this year due to several themes, one being consumer demand for bandwidth. The report cites Cisco data estimating a 13-fold increase of global mobile data traffic from 2012-2017.
“Carriers are searching for additional spectrum to leverage exponential growth in data traffic – much of which is being driven by entertainment and media content consumption," the report says.
Another theme driving deals will be a “race for content,” which is why Disney paid $4.1 billion for Lucasfilm and Netflix spent $100 million for two seasons of House of Cards, the report says.
A third theme, according the report, is the desire among some companies to divest of non-core assets, as Tribune is doing by trying to sell off its newspaper businesses.
The report also cites a previous report that makes the case that entertainment, media and communications (EMC) chief executives are more active in M&A than are the CEOs in other industries. About 53 percent of EMC CEOs have entered into strategic alliances or joint ventures in the past 12 months compared with a sample average of just 36 percent. Also, EMC CEOs anticipate bringing new products or services to market compared with 25 percent in other industries.