The picture for European M&A in the media sector may be about to change. While figures are still far below the media ?bubble? of 2000/01, according to a report by PwC, total M&A deals to date highlights a sharply improving trend towards the end of 2003 and this continues through to September 2004.
A total of 50 transactions, worth a combined ?9.1bn, were completed in the European media market in the second half of 2003. This compares with 42 deals totalling ?4.9bn in the second half of 2002. The total deals for 2004 are expected to exceed 100 at a value of more than ?20 billion.
It has been an interesting year so far in the world of media M&A. The $1bn tussle over Hollinger International, Comcast’s hostile $66bn bid for Walt Disney and the recent £1.1bn merger between Informa and Taylor & Francis already make this a year to remember.
Sanjay Wadhani, Corporate Finance Director of Ingenious Corporate Finance, comments on the significant upturn in media M&A. ?In recent years shareholders have been understandably cautious about M&A across most media sectors. This year there have been improvements in the market most notably in advertising – this indicates an upturn across the media sector as a whole.?
A catalyst for this activity, in the UK at least, is The Communication Act 2003. The Act frees up M&A laws for independent UK media groups and is expected to lead to more foreign ownership of media assets and will speed up the process of consolidation in Radio, TV and Newspapers,
Ingenious Corporate Finance was an advisor on transactions such as the sale of Talkback to Freemantle media and the sale of Hatrick productions to Kleinwort Capital where Kleinwort bought a 45% stake of Hatrick for £23 million. HatTrick retained the remaining 55% of the equity and continues to run the company. Wadhani says the Hatrick/Kleinwort deal is typical of M&A’s following the Communications Act. ?Each company is doing what it does best and this indicates more M&A deals of this kind in the future.?
