As widely reported by the mainstream press, worldwide M&A activity has slowed significantly in 2016. While no sector is immune, includ- ing entertainment and media, there are positive indications that
there is momentum on the horizon.
Forecast and Outlook
PricewaterhouseCoopers recently released
its annual Global Entertainment and Media Outlook 2016–2020, a comprehensive
five-year view of international consumer
spending and advertising revenues. Although M&A activity stagnated in recent
months, the outlook forecasts U.S. E&M
spending to reach $720 billion by 2020, up
more than 19 percent from 2015. The report also suggests that E&M worldwide
revenues could rise at a compound annual
growth rate of 4. 4 percent from 2015 to
2020, reaching $2.1 trillion.
One Deal Closes While Others Flirt,
a Huge Surprise Emerges
Although the future looks promising, near-term challenges remain for both companies and investors. That’s reflected by the
on-again, off-again potential merger of
Starz and Lionsgate.
But June brought a big M&A surprise:
Microsoft announced plans to acquire
LinkedIn for $26.2 billion. It would be
Microsoft’s largest acquisition ever, eclipsing the company’s $8.5 billion purchase of
Skype. As news continues to emerge, many
stakeholders patiently wait to see how the
questions surround the companies’ ability
to integrate their services for consumers’
benefit, but one thing is for sure: This acquisition marks Microsoft’s re-emergence
in the social media and mobile sectors.
Rather than targeting general consumers, it will allow Microsoft to maintain a
stronghold on the lives of digital workers.
To really grow, E&M companies must look
beyond domestic markets. For example,
China is expected to surpass U.S. box office
revenue by 2017. It would be the first time
the U.S. has not held that top spot. For this
reason, Hollywood has begun to strengthen ties with China. This year, California-
Entertainment and Media M&A May
Be Down—but Certainly Not Out
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