PwC: Media M&A Volume Rises in 2013

Internet, Cable Deals Help Fuel Growth

Deal volume increased in the entertainment, media and communications sector in the first nine months of the year, driven by heightened activity in the Internet/Information Services sector, as well as a few big cable transactions, according to PriceWaterhouseCoopers.

According to PwC, deal volume in the first nine months of 2013 rose to 648 announced transactions, compared to 594 at the same time last year. 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 2 transactions, ending the period with 13 announced deals.

On the cable and broadcasting side, Comcast took the top spot with its February transaction to acquire the remaining interest in NBC Universal it didn’t already own from General Electric Co. for $16.7 billion. Liberty Global’s $16.3 billion acquisition of British 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 – PE firms represented about 20% of deal volume in the period, about the same level as 2012.

Total deal value in the EMC sector increased 55% in the period to $77.1 billion from $49.8 billion, according to PwC. That was excluding by far the biggest transaction of the year, Verizon Communications agreement to purchase the remaining internet in Verizon Wireless from Vodafone Group for $130.1 billion.

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 which will pose 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.