Cabsat deals dominate European media M&A

According to new PwC analysis of M&A deals across the European entertainment and media industry in 2014, the rebound in deals value since the post financial crisis trough has been far more marked than the recovery in deal volumes. Aggregate media deal value in 2013 and 2014 was three times the annual levels of 2010-2012 – an increase that reflects the return of ‘megadeals’ in the media space over the past two years, particularly in the cable and satellite sector.

According to Mark Maitland, TMT strategy partner at PwC, the total value of European entertainment and media deals in the second half of 2014 was the largest ever seen in a half-year period. Megadeals completed in 2014 included Liberty Global’s acquisition of Ziggo, and BSkyB’s acquisition of Sky Deutschland and Sky Italia.

Cable and satellite deals dominated the top ten European deals in 2014, accounting for the six largest deals – compared to only three sizeable cable and satellite deals in 2012-13.

The top 10 UK entertainment and media deals were led by transactions in the television, publishing and marketing services sectors.

The rankings also reveal contrasts between the UK and Europe. European deals are dominated by corporate trade buyers while in the UK, private equity has a more significant presence in the top ten, such as Apax Partners’ purchase of the remaining stake in Trader Media Group (now Auto Trader), and other large deals completed by BC Partners, Cision (GTCR-owned) and Lake Capital Partners.

Despite corporates accounting for the largest European deals in 2014, the general trend is that private equity investors are continuing to show strong interest in media assets, particularly in the UK market.

According to PwC, three key themes are driving M&A activity:

1. Continued transformation of television and content

During 2014, ongoing shifts in TV viewing and the ownership of content and distribution drove M&A activity across Europe, through a combination of triple-play deals, cross-border plays by US majors, and diversification moves by TV channels.

2. Digital remains a key M&A driver

Digital technology is at the heart of media and M&A for several reasons. It creates change and demands investment; it makes businesses buy new capabilities in search of growth; and it triggers disposals of non-digital businesses to raise funds for digital acquisitions and spending.

3. A growing appetite for B2B data and events businesses

Having weathered the downturn more robustly than business-to-business (B2B) magazines, B2B events and B2B digital data services have now returned to growth, and are attracting acquisition interest both from PE investors and corporates.

Nick George, head of TMT transaction services at PwC, said the three themes highlighted would continue to underpin much of the E&M deal activity across Europe in 2015. “We anticipate activity will be driven by consolidation, digitisation and portfolio restructuring. We are confident that the European media deals environment in 2015 will be every bit as exciting as 2014 and potentially more so, even given an uncertain macroeconomic backdrop in the Eurozone. We expect growth as media companies continue to invest in digital, with a further positive factor that private equity investors are continuing to raise funds and show active interest in Europe’s media sector,” he advised.

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