From the presidential election to the surge in celebrity deaths, 2016 was a year many were happy to see end. But for Hollywood's upper echelon of bankers, lawyers and business development executives, it was a Dealapalooza.
AT&T made a massive $85.4 billion play for Time Warner, Lionsgate swallowed up Starz for $4.4 billion, WME-IMG and partners paid $4 billion for the UFC league, and NBCUniversal grabbed DreamWorks Animation for $3.8 billion.
The value of dealmaking activity in the entertainment industry hit a record $150.2 billion, according to M&A tracking firm Mergermarket.
"Values have been extremely high, with a fair share of mega-deals of $1 billion-plus," notes PricewaterhouseCoopers partner Bart Spiegel. "Anybody sitting on the sidelines is going to find themselves falling behind."
What's behind the consolidation wave? "The main driver is digitization, the popularity of digital services and streaming," Elizabeth Lim, senior M&A analyst for Mergermarket, tells THR. "There is a market share grab going on. The second major driver is content. Content is key, and with streaming services it's available all the time. It's about what they say is the second golden age of television. It's really competitive, and the big companies with the big bucks are leading the pack."
What does that mean for 2017? Analysts point to China flexing its financial muscle even further, if the Trump administration allows it, following Dalian Wanda snapping up Legendary Entertainment for $3.5 billion and Dick Clark Productions for $1 billion, and Alibaba promising to spend billions more. And 21st Century Fox's $14.6 billion deal for European pay TV giant Sky could signal that consolidation will continue.
"Given a likely continued emphasis on scale, I wouldn't be surprised by an extended wave of consolidation into 2017," says CFRA Research analyst Tuna Amobi. "Although it's hard to imagine that the pace of M&A activity would approach what we have witnessed."
Lim also says, "I don't really see deal activity slowing down immediately." But she suggests companies looking to buy may want to strike before interest rates rise further, which drives up the cost of borrowing.
The value of announced U.S. entertainment industry mergers and acquisitions for 2016 through Dec. 27 reached $150.2 billion, up sharply from $33.0 billion for all of 2015 and $14.5 billion for 2014, according to Mergermarket. It is the highest mark it has recorded since it started compiling that data in 2001.
THR broke down the biggest deals of 2016 to find the 20 dealmakers of the year.
