Tuesday 19th September saw the launch of MEDIAtalk, BDO’s analysis of corporate deal activity and current trends dominating the rapidly shifting media industry in the second half of 2017. Global M&A had a tremendous start to the year, however ideals are changing and the increasing capability of programmatic is forcing brands to question their needs and, in turn, their spending. Our report suggests potential for a number of exciting deals to be made in H2 of 2017.
Global M&A trends
2016 saw an unprecedented number of mega deals, whereas H1 2017 struggled to match this. At one point, Verizon were rumoured to be contemplating the acquisition of TV giant Charter Communications, which would have sported a price tag of over $100 billion. Had the deal gone ahead, this would have been demonstrative of the significant impact one deal can have on aggregate values. Despite this, deal flow in the global media sector held up well in H1 2017 (244), outpacing the number of deals announced in the second half of 2016 (239).
This would have been demonstrative of the significant impact one deal can have on aggregate values.
UK M&A trends
The EU referendum triggered a significant decline in UK media M&A deals in H2 2016, and has been relentless in its impact on the first half of 2017. The decline in H1 2017 as compared to H2 2016 was a 95% drop in combined deal values, although the peak in deals last year was arguably caused by 21st Century Fox’s £11.7 billion offer for Sky. The tilt in numbers north caused by this mega deal means that the estimate for the full year 2017 may prove to be more encouraging in the final analysis.
the number of exits of UK media businesses declined by 7% in H1 2017 as opposed to H2 2016.
Private equity trends
Again, PE-backed media M&A activity has been considerably quieter in the first half of 2017 compared to 2016 following the EU referendum; the number of exits of UK media businesses declined by 7% in H1 2017 as opposed to H2 2016. Predictably, the deals that are making headway are generally acquisitions of smaller stakes and lower value.
Publishing and advertising took the lead in UK media M&A in 2016, and although digital media deals were on the decline in H1 2017, publishing deals maintained their position and accounted for 40% of all transactions. Broadcasting and content were not far behind, and overtook marketing services to claim the third spot.
The rise of AI technology has given countries the opportunity to emerge as industry leaders, and Canada is anticipated to be at the forefront
Spotlight on Canada
There were more inbound deals targeting Canadian media businesses between 2014 and 2016 than at any other point in the last decade. More recently, the rise of AI technology has given countries the opportunity to emerge as industry leaders, and Canada is anticipated to be at the forefront of exciting innovations comparable to the likes of Amazon and Netflix.
To view the full report, click here. Or for more information, please contact Andy Viner, our UK and global head of media & entertainment.