Global media M&A reaches $2.5 trillion in 2018

M&A activity in the media sector has reached historic highs in the first half of 2018 driven by deals like the billion-dollar bidding war for Rupert Murdoch’s Twenty-First Century Fox.

According to data from Thomson Reuters Deals Intelligence, the value of global media deals has risen to $2.5 trillion year-to-date, up 64% compared to the same period in 2017. Before this the highest it reached was $2.3 trillion in 2007.

Commenting on the data, Heran Cristerna, co-head of global M&A at JPMorgan Chase & Co said to Reuters: “Companies are moving fast rather than dragging their feet”.

As for proposed media M&A, the sector currently sits at around $322.5 billion for the year, more than six times higher than the same period in 2017.

Bankers say that more consolidation is on its way after the AT&T and Time Warner acquisition was approved by a federal judge with little to no conditions. It was this decision that prompted Comcast to present its $65 billion all-cash counter offer for Fox only last month. At the time Comcast chairman Brian Roberts said that the company is "highly confident that our proposed transaction will obtain all necessary regulatory approvals in a timely manner and that our transaction is as or more likely to receive regulatory approval than the Disney transaction."

The data also suggests that while technology companies have yet to take part in the media M&A activities, because of its entry into video subscription services that may soon be the case.

“The large tech platforms, such as Amazon, Netflix and Alphabet, have become very credible competitors to the media and telecom companies, and are certainly creating a lot of pressure on them,” said George Boutros, CEO of investment bank Qatalyst. “This was a factor in the judge’s approval of the AT&T/Time Warner deal.”

The knock-on effect of the growing number of media M&A deals is that it spreading to various other sectors. In telecoms, Sprint and T-Mobile closed its long-awaited merger that will create a new $146 billion company.

In addition, industry veteran Alexandre Pébereau launched his new company Tofane Global with the acquisition of two large international businesses. The first being KP’s wholesale division iBasis and the Altice Group.

Elsewhere divestitures has also impacted global M&A. General Electric announced a wide-scale plan to  divest $20 billion worth of assets from its healthcare unit and its stake in Baker Hughes.

Speaking to Reuters, Allison Schneirov, partner in M&A group at Skadden, said: “Companies are continuing to use M&A in order to evolve and grow, but at the same time divesting assets to narrow their strategic focus and channel their funds to core areas”.

Regionally, the US topped global M&A activity increasing by 82% to $1 trillion with Europe close behind with announced deals nearly doubling to $767 billion in the first half of 2018.