PwC: Digital Activity Boosts Media M&A


A new report shows that 376 deals in the Internet space helped drive a 3% increase in the number of M&A transactions in the overall U.S. entertainment and media sector last year. The level outpaced overall M&A movement, the PwC US report said.

There were 153 deals in the advertising and marketing areas -- slightly up from 2009. The 53 in broadcasting and cable was down significantly.

The total value of ad/marketing deals was $4.1 billion -- up significantly -- while broadcasting and cable topped $11 billion, which was down. The Internet software services deal-making total value was $7.1 billion.

As the number of overall transactions in the M&E market jumped, the total value fell from $37.2 billion to $33.5 billion year-over-year. (Some values may not have been announced, so the numbers could be altered.) Private-equity companies that had sat on the sidelines during the economic crunch and tougher credit markets upped their pace last year -- and should again in 2011.



"Look for M&E deal volume to continue to outperform the broader market in 2011 as media companies complete more middle-market acquisitions," stated Thomas Rooney, who heads the M&A practice in M&E for PwC US. Of course, the near-completion of the Comcast-NBCU deal already gives the market a huge lift.

The increase in "new media touchpoints" and a hunger for geographic expansion should be factors, Rooney stated. "Companies must determine how they are going to reach their audiences in an increasingly digital market."

PwC stated that E&M transaction multiples for deals, where the values were released, increased for the first time since 2007: "Median enterprise value to EBITDA multiples increased from 8.3x in 2009 to 9.8x in 2010 -- still well below the six-year high of 13.6x in 2007."

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