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 As the recession unfolds, there are new efforts to gauge how the
downturn will affect the fundamental economics of media and
entertainment, and the M&A activity in the industries.PricewaterhouseCoopers LLP illustrates the slowdown in its new study of U.S. media and entertainment dealmaking.
As
of Dec. 31, 2008, the firm reports, there were pending
entertainment and media deals worth $6.7 billion. A year earlier, the
value of pending transactions was $100.8 billion. Moreover, the volume
of deals announced in the fourth quarter slowed to 194, which PwC tells
us is the weakest turnout since the second quarter of 2002.
There were four megadeals announced in 2006 that closed last year, bringing the 2008 entertainment and media deal total to $150.8 billion:
Together, PwC says, those four transactions equaled more than half of the total M&A in entertainment and media. PwC isn't alone in chronicling the weakening media industry. Private equity firm Veronis Suhler Stevenson revised its forecasts. VSS expects overall spending on media and communications to drop 0.4% in 2009, after a 2.3% gain in 2008. Advertising spending will see its first two-year decline in 75 years, with VSS expect a drop of 7.4% in 2009. There are some growth areas. VSS expects Internet and mobile services to grow 9.1% in 2009, although the firm previous expected a 15.5% gain. Mobile content will grow 34.2% and information geared toward institutional, professional and business users will grow more than 5%. Meanwhile, Jordan, Edmiston Group Inc. produced a top-10 list of reasons that there will be more media M&A than many people expect in 2009. Among other reasons, the firm pointed to fragmentation and extensive VC investment in advertising networks, and strong balance sheets at companies such as Microsoft Corp. (NASDAQ:MSFT), Adobe Systems Inc. (NASDAQ:NADB) and Comcast Corp. (NASDAQ:CMCSA). - Chris Nolter See summation of PricewaterhouseCoopers report See summation of VSS Revises Forecast for Media and Communications Industry See story about Jordan, Edmiston Group report from Dealscape See press release from Jordan, Edmiston Group Categories Deal Video
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