Pandemic Recovery Boosts Media and Telecom M&A

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LONDON—As major economies recover from the pandemic, PwC is reporting that companies announced 410 deals worth around $83 billion in the media and telecom sectors during the six months ending on May 15.

That is a big turnaround from only 32 deals in the first half of 2020. 

Two big drivers were the massive investments required by 5G and a pivot to streaming. The “increasingly competitive dynamics in 5G and streaming [are] poised to drive M&A in 2021 and beyond,” PwC noted. 

One example of that was AT&T’s decision to unwind its acquisition of WarnerMedia by merging the assets with Discovery. 

“This announcement was the biggest sign yet that telecom giants were reversing course on their plans to expand into the media space,” the report noted. “It followed on the heels of Verizon’s disposal of HuffPost and Yahoo/AOL, T-Mobile’s discontinuation of its TVision streaming service and AT&T’s own spinoff of DirecTV into a joint venture with TPG Capital.”

“Given the simultaneous rise of 5G and streaming, both sectors have become increasingly competitive and require more investment in the near term,” the report noted. “As a result, many telecom giants are opting to exit media in order to double down on building out their 5G networks. We expect the demand for 5G capabilities — including fiber and broadband, cell towers and other technologies — to consume significant amounts of capital for telcos in the coming years.”

As the streaming wars heat up, other media companies have “turned their attention to content acquisition,” the report also noted. “The announced merger of WarnerMedia and Discovery brings together complementary scripted and non-scripted content to leverage across the company’s platforms, while Amazon’s announced acquisition of MGM Studios for $8.45 billion will bolster Prime’s catalogue with key franchises and a deep content library. As these media giants compete with the likes of Netflix and Disney, we expect to see a continued race for content and sports rights, as well as further consolidation among other streaming providers and studios as they seek the scale needed to remain competitive.”

However, the digital disruption brought on by COVID-19 and shifting consumer behaviors have produced a decline in broadcasting and cable deals, PwC noted, thanks in part to the growing popularity of streaming and accelerated cord-cutting.

“Players in the media and telecom sector are starting to feel the stress brought on by the enormous capital requirements needed to compete and maintain relevance during this period of transformation, leading to a wave of asset reallocation,” noted Bart Spiegel, media and telecom deals partner at PwC. 

The report is available here

George Winslow

George Winslow is the senior content producer for TV Tech. He has written about the television, media and technology industries for nearly 30 years for such publications as Broadcasting & Cable, Multichannel News and TV Tech. Over the years, he has edited a number of magazines, including Multichannel News International and World Screen, and moderated panels at such major industry events as NAB and MIP TV. He has published two books and dozens of encyclopedia articles on such subjects as the media, New York City history and economics.