Media and telco M&A volume in the US increased 29% year over year in 2017 to nearly $140 billion, driven mostly by megadeals like Disney’s $68.4 billion bid for 21st Century Fox, according to new data from PwC.
More specifically, there were 18 megadeals in 2017, including Discovery’s $11.8 billion merger with Scripps.
Although large transactions with deal values over $1 billion represented only 9% of total deal volume, they contributed to 84% of overall deal value.
In terms of volume, the advertising and marketing subsector of media and telecommunications dominated M&A activity in 2017, with 279 deals, up 40% from 2016.
PwC attributed most of that deal activity to the growth in PE investment, as well as a higher volume of smaller deals by marketing and media companies looking to acquire niche capabilities.
Deals led by private equity purchasers were 22% of deal volume, compared to 19% in 2016. Strategic acquirers, however, still commanded most of the megamergers and acquisitions.
“Looking forward to 2018, as user experience and data-driven ad technology remain at the forefront, we expect the momentum in this sector to likely continue not only from the traditional media players but also from across industry lines,” PwC’s US media and telecommunications deals partner, Bart Spiegel, wrote in the report.
Another major trend was consolidation, as companies “shed unnecessary assets to improve operating efficiencies and expand upon their capabilities and customer offerings,” according to PwC.
Those findings underscore other recent M&A findings from investment banks JEGI and Luma Partners.
Luma’s founder and CEO, Terry Kawaja, billed 2017 as a period for “healthy clean-up” in the media and marketing space, as a number of public ad tech firms trading at low valuations were acquired or taken private.
The PwC report also echoed Luma’s predictions that telcos and private equity would continue their upward momentum in driving media and advertising M&A in 2018.
