by Fintechnews Switzerland February 26, 2024

In 2023, the mergers and acquisitions (M&A) market underwent a considerable decline, dropping by 15% year-on-year (YoY) in value to US$4.3 trillion and reaching its lower level in a decade, data from Bain and Company’s M&A Report 2024 shows.

Strategic M&A declined 6% and strategic deal multiples were the lowest they’ve been in a decade. Deals were delayed for a number of reasons, the report says, including high interest rates, mixed macroeconomic signals, regulatory scrutiny, and geopolitical risks.

M&A deal market value (in trillions of US$), Source: M&A Report 2024, Bain and Company, Jan 2024

Media M&A in 2023

In the media industry, companies navigated significant shifts driven by the decline of linear TV and the need for profitability in streaming services. They actively adjusted strategies to focus on profitability rather than subscriber growth solely, diverting non-core assets and making bold moves like joint ventures with former competitors.

Some of 2023’s most notable deals:

• Walt Disney’s cable sports channel ESPN inked in August a US$2 billion deal with casino-owner Penn Entertainment to jointly launch a sports betting business under the brand ESPN Bet. The strategic partnership is notable because it represents Disney’s initial foray into sports betting, an industry sector that Disney CEO Bob Iger indicated was not an arena that he saw as compatible with the Disney brand back in 2019.
• Disney bought in November 2023 Comcast’s one-third stake in Hulu for US$8.6 billion. The acquisition will see the two platforms merge into a single unified streaming app, offering standalone options for both Hulu and Disney+ while also exploring bundle deals.
• Lionsgate Entertainment closed in December its acquisition of global entertainment platform eOne from Hasbro for approximately US$500 million. The deal represents a strategic expansion of Liongate’s content portfolio and global reach, adding 6,500 film and television titles to its library and expanding its presence in Canada and the UK.
• In October, Microsoft concluded its acquisition of Activision Blizzard for US$69 billion, the company’s largest ever deal. Activision Blizzard is the publisher and developer of several massive gaming franchises, including Call of Duty, Diablo and World of Warcraft. Its mobile gaming subsidiary, King, is the developer behind Candy Crush Saga. The deal emphasizes Microsoft’s commitment to community-driven gaming experiences.
• In the publishing vertical, British group Informa secured two deals in 2023, acquiring in March international business-to-business (B2B) group Group Tarsus, and in May, specialist B2B events, data and media group Winsight. The Tarsus deal, valued at US$940 million, will see Tarsus combining with Informa’s live and on-demand events portfolio. The Winsight deal, worth US$380 million, will allow Informa to strengthen its position in the specialist B2B foodservice market.
• In June, Providence Equity Partners, a premier private equity firm specializing in growth-oriented investments in media, communications, education and technology, closed its acquisition of global events business Hyve in partnership with Searchlight Capital Partners. Hyve operates a global portfolio of market-leading in-person and tech-enabled events including brands such as Shoptalk, Spring Fair, Bett, Mining Indaba and the recently acquired Fintech Meetup.
• In July, multi-platform media company Vice Media Group completed its sale to a consortium of its former lenders. Launched in 1994 as a fringe magazine, Vice Media operates in more than 30 countries. The company’s revenues have been flat for some years and it has also struggled to turn a profit. Once valued at almost US$6 billion, Vice Media was sold for US$350 million.
• American mass media, publishing and information services company Penske Media Corporation acquired in February a 20% stake in Vox Media for US$100 million. The deal made Penske Media the largest single shareholder in the digital publisher. Vox Media operates several brands including Vox.com, New York Magazine, Popsugar, Thrillist, Vulture and SB Nation.

2024 outlook

In 2024, the M&A landscape is poised for significant activity, driven by an excess of assets waiting to be traded. Bain expects corporates to sell assets that do not fit with their strategy, and private equity to sell aging portfolio companies. The firm anticipates more scale deals for consolidation before a return to growth-oriented investments.

In the media industry, companies will continue to turn to different M&A strategies to get out ahead of the evolving sector, pursuing opportunities in divestitures, partnerships with competitors and capability acquisitions.

Reed Phillips, CEO of Oaklins DeSilva+Phillips, a middle market investment bank focusing on media, technology and marketing industries, expects to see moderate activity in the digital media sector this year, though valuations will be substantially lower than they were in 2021-2022.

Similarly to Bain and Oaklins DeSilva+Phillips’ Reed Philips, FE International, a digital media M&A advisory firm, forecasts notable deals in the digital media space this year as companies shift strategies to adapt to new market expectations, opting for concentrated investments and prioritizing innovation, efficiency, and fortification of organizational structures.

Several trends will drive this surge, the report says, including the rise of generative artificial intelligence (AI). Generative AI is set to fundamentally restructure the digital media value chain, helping generate more engaging and personalized content, improving efficiency and productivity, and enabling predictive analytics.

According to FE International, industry players will consolidate their grip this year onwards, investing in technological add-ons including generative AI-enabled tools to maintain the edge of their offerings.

Notable digital media deals in 2024 so far:

• Thomson Reuters Corporation, a global content and technology company, announced in February the acquisition of World Business Media Limited, a cross-platform, subscription-based provider of editorial coverage for the (re)insurance industry. World Business Media’s products include The Insurer, The Insurer TV, and The Insurer Events. The acquisition aligns with Reuter’s strategic priority to provide must-have news and insight for new customer markets and professional verticals.
• TechTarget and Informa struck a deal in January to combine Informa Tech’s digital businesses with TechTarget to create a leading global platform in B2B data and market access. The combined company, called New TechTarget, will focus on helping vendors in enterprise technology and other markets, providing services in audience development, demand generation, buyer intent, content marketing and tech research. In addition to its Informa Tech digital businesses, Informa said it would contribute US$350 million of cash in exchange for a 57% stake in the combined company.

Featured image credit: edited from freepik