Monday, January 17, 2022

Media M&A Should Be Fun In 2022 After Banner Year Driven By Content Boom And AT&T Reversing Course

- Advertisement -
- Advertisement -
- Advertisement -


A surge in demand for content material, large corporations shedding non-core belongings and consolidation in digital media led to an enormous rebound in leisure M&A in 2021, ushered in by two landmark combos in April and ending with a drumbeat of offers in December.

Momentum is seen persevering with into 2022 with a serious asset, Starz, formally on the block (and by extension in all probability all of mum or dad Lionsgate). Big broadcaster Tegna is formally fielding affords. Kevin Mayer and Tom Staggs’ lively Blackstone-backed media firm is including Faraway Production, and the principals inform Deadline they’ll proceed to eye offers in content material, social media storytelling and associated e-commerce.

All gamers, large and small, are scrutinizing their belongings and exploring choices.

“No one is sitting on the sidelines. They know that we are in an era that is going to set the stage for next 10 to 20 years,” stated Bart Spiegel, PwC’s longtime companion overseeing media and telecom offers. “This is the time when everybody is staking out their positions.”

See graphic under for the largest and most important combos of the yr, which noticed AT&T shed WarnerMedia in a cope with Discovery; Amazon purchase MGM; and two main expertise companies, CAA and ICM Partners, come collectively.

Private fairness is again and Special Purpose Acquisition Companies (SPACs) are within the image, the latter extra as stalking horses doubtlessly driving up valuations than key gamers since many lack the monetary sources for main offers. But SPACs usually solely have 18 months to make an acquisition or they’ve to present buyers again their cash. Potential targets know that. The SPAC crush could also be a cause Lionsgate put Starz in the marketplace when it did.

M&A hypothesis got here to a boil final spring (on the heels of WarnerMedia and MGM agreements), significantly targeted on a possible mega-deal between ViacomCBS and Comcast. But what truly occurred was smaller however logical distribution partnerships between them (Sky bundling Paramount+ in its markets just like the UK, Ireland, Germany and Italy, and SkyShowtime launching in smaller European markets). After all, one firm can’t two broadcast networks or two units of tv stations. And NBC’s shuttering of its NBC Sports Network begs a query that overhangs media offers — what number of legacy cable nets are advisable to gather beneath one roof? (Comcast — and others — may very well be thinking about Paramount alone.)

“CoComelon”
Netflix

The Mayer/Staggs entity quickly emerged as a brand new participant with two offers price practically $4 billion in Hello Sunshine and Moonbug Entertainment, highlighting the improved worth of content material. Production corporations with compelling content material and good relationships with established gamers and platforms are sitting fairly proper now.

All kinds of gamers entered the deal combine this yr. Politico was bought to Germany’s Alex Springer; Univision and Mexico’s Televisa joined forces to create a Spanish-language behemoth; Fox acquired TMZ and MarVista Entertainment; STX discovered a brand new proprietor, Najafi Companies; Endeavor bought its content material arm to CJ ENM of Korea; Dark Horse Media went to a Dutch holding firm; and AT&T unloaded Crunchyroll to Sony Pictures/Funimation.

The telco large was in reality behind an enormous chunk of this yr’s deal movement because it exited media. The John Stankey-led firm additionally bought a stake in DirecTV to TPG Group, the third largest trade transaction in 2021 (WarnerMedia was the primary). Only two years after closing on Time Warner, A&T realized what it wanted was actually money to pay down debt, purchase spectrum and roll out 5G, in different phrases, its core enterprise.

Same for Verizon, which divested its media enterprise Oath (together with Yahoo and AOL) to Apollo Global administration.

According to PwC, media and communications offers totaled $233 billion final yr, up 27% from (a sluggish) 2020. (However, its information contains sub-sectors that don’t at all times fall beneath Deadline’s purview like straight telecom, broadband, on-line schooling, cloud providers and e-commerce offers.)

A couple of key offers haven’t closed but. Discovery-WarnerMedia is anticipated in mid-2022. Amazon-MGM can also be anticipated to go ahead regardless of loud antitrust rumblings within the present administration. The DOJ has moved towards one deal, suing to dam ViacomCBS’ $2 billion sale of Simon & Schuster to Bertelsmann, which already owns Penguin Putnam. That deal offered apparent downside. But some on the Street assume an absence of headlines because the lawsuit was introduced in early November signifies ongoing negotiations and the mixed firm may shed belongings to achieve approval.

Regulatory considerations will likely be a consideration for MA& in 2022, as will rates of interest, inventory costs (some have been in rut) and household management, which is a selected problem within the media area. Also how aggressive tech corporations will likely be in following Amazon-MGM. The explosion of streaming and demand for content material will proceed to drive the motion.

What’s the Deal with 2022

The following is a seize bag of predictions for the trade’s highest-profile media gamers led by the brand new WarnerBros. Discovery, Comcast, ViacomCBS, Lionsgate, Fox and another key gamers.

Warner Bros Discovery

David Zaslav, the Discovery CEO who will likely be operating Warner Bros. Discovery, has stated publicly he’d prefer it to continue to grow and do extra offers as soon as his closes. Others see issues unfolding in another way as soon as prices are taken out of the mixed entity and the inventory perks up. Because one new firm shareholder who additionally occurs to be Zaslav’s mentor, John Malone, “is a seller. He is always a seller at the right price,” stated a number of Wall Streeters.

Could Comcast finally be the client?

Others see the brand new Warner Bros. Discovery merging with ViacomCBS. The latter, managed by Shari Redstone, nonetheless, can also be a logical purchaser for Lionsgate or Starz. A Showtime-Starz tie-up has been on the market, a combo Showtime boss David Nevins has backed prior to now.

ViacomCBS inventory is low so arduous to make use of as deal forex. Lionsgate inventory is low too, so it could desire a hefty premium.

On tech, many assume Apply wants a studio for unique content material and a library if it desires to broaden Apple TV+ and that it’s going to finally purchase one. As per above, the market cap of the corporate behind The Hunger Games, Twilight and John Wick is simply $3.45 billion, nevertheless it’s seemingly price significantly extra in a deal, particularly contemplating the $8.45 billion Amazon paid for MGM. Regardless, that may be chump change for cash-rich Apple, whose market cap is approaching $3 trillion.

YouTube, owned by Google/Alphabet, might studio store too. Lionsgate or Paramount? Would Redstone promote Paramount? “She may have no option. That is the most valuable part of the company,” stated one Wall Streeter.

In the deal equation it’s clear that Comcast, with a market cap of $230 billion and a controlling household that may by no means promote, is a purchaser. Lionsgate is a vendor. But ViacomCBS’ measurement – a $19 billion market cap – places it within the center. It may go both means, which is why it’s the main focus of a lot hypothesis.

Then there’s Roku. What a couple of cope with Apple or Comcast? Owning Roku would let Apple supply customers a less expensive different to the Apple TV field. Comcast may speed up its streaming video technique – though the Philadelphia-based large has already entered the good TV market this yr. For Roku, proudly owning a studio like Lionsgate would assist it broaden its library and produce extra unique content material.

rupert murdoch

AP

There’s additionally been rising hypothesis about Fox and News Corp, sister corporations owned by the Murdoch household. Could patriarch Rupert Murdoch, 90, make a transfer — i.e., promote — Fox? “Rupert would still have News Corp,” famous one analyst, with the mogul’s beloved newspaper belongings led by the Wall Street Journal (now reaping wholesome charges from Google and Facebook digital content material offers), cash-flow-steady HarperCollins, Australian broadcaster Foxtel and a profitable on-line actual property enterprise led by Realtor.com. Another broached the thought of Murdoch reconstituting News Corp. and Fox right into a single public firm once more.

A so-called “free radical” within the leisure ecosystem is AMC Networks, now run by interim CEO Matt Blank after longtime chief Josh Sapan stepped down. But the place that firm’s heading is understood solely to its controlling shareholders, the Dolan household. No one is on the market speculating on what or when, however nobody could be stunned at a deal.

Because the panorama continues to shift. Content is dear to supply. Streaming providers outdoors of Netflix and runner-up Disney+ might need to consolidate.

“Consumers are going to want three to five streaming platforms. In the future, as you see more people cut the cord, there won’t be any latency issues, no buffering. As the telcos build out infrastructure, it becomes really important for these companies to establish that first-mover advantage. Once you sign up for a platform, there is a stickiness associated with that,” stated one trade skilled. “It’s about, ‘What do I need to get us there?’ and ‘We need to move and move quickly.’”

Following is record of main media and leisure mergers and acquisitions of 2021. Financial phrases had been introduced in lots of instances, however for some the numbers given are unofficial or estimated. And, as talked about, some had been introduced however haven’t but closed.





Source hyperlink

- Advertisement -

More from the blog

Sony Pictures India Moves Into Tamil Cinema With Kamal Haasan Project

Sony Pictures Films India (SPFI), the Indian manufacturing arm of Sony Pictures International Productions, is focusing on a transfer into the rising regional...

Anime ‘Belle’ Estimated $2M+ Over Four-Day Frame A Record For Director Mamoru Hosoda – Specialty Box Office

Belle is ready to high $2 million Thurs.-Mon. on 1,326 screens, in accordance with distributor GKIDS. With Saturday’s actuals, it mentioned, the gross...

‘Spider-Man: No Way Home’ Tops $1.6B WW & Becomes Biggest Movie Ever In Mexico; ‘Scream’ Shouts With $49M Global Bow – International Box Office

Refresh for up to date…: In its fifth weekend, Sony/Marvel’s Spider-Man: No Way Home swung previous the $900M mark on the worldwide field...

Samsung’s next tablet lineup could include a 14.6-inch ‘Ultra’ model with a notch

Samsung is likely to be including its first-ever “Ultra” model to its upcoming Galaxy Tab S8 lineup, which may also include...