Report: M&A Activity Surges 75 Percent in Entertainment and Media

House of Cards - Kevin Spacey

A demand for content and bandwidth among consumers will fuel the desire for companies to strike deals this year and beyond.

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.

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“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.