Media and entertainment industry in US declined 49 per cent in 2009: PwC
By Audience Matters News Desk
Wednesday, February 10, 2010
 The media and entertainment (M&E) industry in the United States (US) declined by 49 per cent in 2009 as compared to the year ago period according to a report released by PricewaterhouseCoopers (PwC). The total media and entertainment deals completed in 2009 is valued at $77.4 billion comprising of 714 deals, a decrease of 29 per cent from 1,000 deals completed in 2008, reveals the study titled ‘Transaction Services 2010 US Entertainment & Media M&A Insights’.
The completed E&M deals in 2009 represented 12.3 per cent and 13.3 per cent of total completed US merger and acquisition transactions in terms of value and volume, respectively, says report.
However, the report is positive about the year ahead. It says that though economic and financing challenges still exist, positive pipeline metrics seen in the second half of 2009 could signal a rebound of deal activity in the US M&E industry in 2010.
“Continuing signs of gradual economic recovery and an anticipated easing of credit markets point to a potential uptake in M&E deals. While M&E companies and investors are currently focusing on driving efficiencies by zeroing in on their core competencies, in 2010, we believe there will also be a renewed focus on new media opportunities as the industry’s tolerance for risk rebounds and attention shifts towards higher growth,” said Thomas Rooney, Entertainment & Media Leader, PricewaterhouseCoopers' Transaction Services.
Responding to the shift toward new media, E&M companies are seeking opportunities to capture value online with mobile and technology leading M&A activity. “Given the level of success that certain technology giants have had in revolutionising the distribution of media through convergence, we expect similar interest to continue well into 2010,” says Rooney.
Additionally, private equity showed interest, with a total of 126 financial sponsor-backed completed M&E deals. The sectors that showed interest for private equity investment includes advertising and marketing, publishing and internet software and services.
The report states that 2009 saw major recessionary trends that burdened the M&E industry with untenable debt levels. “Several high-profile M&E companies faced the prospect of defaulting on debt, exploring restructuring alternatives, or even seeking bankruptcy protection. The bankruptcy protection in US M&E increases to three fold to stand at 30 in 2009 as compared to 10 in a year ago period,” says the report.
The analysis identifies several other key trends impacting the E&M industry and deal market:
Corporate M&E deal activity returns to the forefront: As expected, well-capitalised strategic buyers dominated M&E deal activity in 2009, with $70.6 billion (or 91 per cent of total deal value) in completed deal value (versus 57 per cent in 2008).
Companies across E&M are establishing themselves on new media: Companies spanning music, film, and publishing made headway in 2009 to capture some of the value being generated through online and mobile media. With spending in these sectors expected to increase at 9.2 per cent compounded annually by 2013 which is supposed to enhance deal activity as per PwC.
This report represents a comprehensive analysis of the evolving M&E transaction arena. The Firm based findings on research provided by industry-recognized sources, including Thomson Reuters and PricewaterhouseCoopers' Global Entertainment and Media Outlook: 2009–2013.
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