Cable deals were on the upswing in the first nine months of 2013, but the scale-driven transactions that fueled most of the growth in the first three quarters of the year may give way to smaller deals aimed at improving network mobility, according to accounting giant PricewaterhouseCoopers.
The number of transactions in the cable sector was up for the year — to 13 from 11 in the previous year, according to PwC — and total media deal value rose 55% from $49.8 billion in the first nine months of 2012 to $77.1 billion in the same period this year.
Total media deal volume in the first nine months of the year rose to 648 announced transactions from 594 at the same time last year, according to PwC.
The biggest rise was in the Internet/Information Services sector, which counted 123 transactions in the period, up by 19 from 104 transactions a year ago. Publishing and Telecommunications, with an increase of 16 and 12 deals, respectively, followed closely, with cable besting its 2012 deal volume by two transactions, ending the period with 13 announced deals.
International deals, a big part of the landscape in 2012, were less of a factor this year, with overall transactions down to 126 in the first nine months, compared to 156 transactions at the same time in 2012.
On the cable and broadcasting side, Comcast took the top spot with its February transaction to acquire the remaining interest in NBCUniversal it didn’t already own from General Electric for $16.7 billion.
Liberty Global’s acquisition of U.K. cable company Virgin Media for $16.4 billion was second, followed by Liberty Media’s acquisition of a 27% interest in Charter Communications for $2.67 billion.
Private-equity companies continued to play a role in the resurgence, representing about 20% of deal volume in the period, about the same level as 2012.
Total deal volume in the Entertainment, Media and Communications sector increased 55% in the period, excluding by far the biggest transaction of the year, Verizon Communications’s agreement to purchase the remaining interest in Verizon Wireless from Vodafone Group for $130.1 billion. With the Verizon deal included, total deal value rose a hefty 316% to $207.2 billion from $49.8 billion.
Those numbers could be further skewed if a deal for Time Warner Cable comes later in the year. Last week, speculation was high that some kind of transaction could be forthcoming, after reports emerged that Charter Communications was lining up bank financing for a TWC bid, and that industry giant Comcast was considering a joint bid for TWC — or even attempting to swallow the No. 2 cable operator itself, as one of the many options before the company.
Some analysts have estimated that TWC could sell for $160 per share — a 20% premium to its already-inflated price of $132.92 on Nov. 22. At that price, and the assumption of its $23 billion in debt, a TWC deal would be valued at nearly $70 billion.
MOBILE HOT SPOT
A Time Warner Cable deal notwithstanding, PwC estimated that going forward the hottest sector in the EMC space could be mobile networking equipment and services, particularly as the surge in mobile data usage has spotlighted the need for more efficient mobile networks.
PwC estimated that mobile data traffic is expected to rise 66% annually between 2012 and 2017, posing challenges for network operators.
“With finite spectrum assets and significant costs to acquire and build out capacity, operators are looking for innovative, flexible, reliable and cost effective ways to alleviate their capacity and coverage issues,” PwC wrote.
The scale-fueled transactions of early 2013 could give way to smaller deals meant to improve network mobility, per PricewaterhouseCoopers.
Cable deals were on the upswing in the first nine months of 2013, but the scale-driven transactions that fueled most of the growth in the first three quarters of the year may give way to smaller deals aimed at improving network mobility, according to accounting giant PricewaterhouseCoopers.Subscribe for full article
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