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Report: Entertainment Mergers, Acquisitions Outpace Rest of Business

27 Jan, 2011 By: Chris Tribbey

In 2010, American entertainment and media mergers and acquisitions, or M&A, outpaced the overall U.S. deal market, with no slowdown in sight for 2011, according to a report from PricewaterhouseCoopers.

Completed entertainment and media deals increased 3% year over year to 804 total transactions, though the value of those deals fell to $33.5 billion, compared with $37.2 billion in 2009. The increase in volume is attributed to more deals involving Internet software and services, the company said.

“As the entertainment and media industry accelerates its transition to mobile access and dynamic content, cash reserves and improved debt-financing conditions will allow companies and private equity firms to execute on M&A strategies focused on content offerings and to reach key audiences amid an increasingly digital environment,” said Thomas M. Rooney, U.S. entertainment and media M&A leader for PricewaterhouseCoopers. “With the growing influence of new media touch points, entertainment and media companies may also take advantage of strategic M&A plans to expand into new geographies and acquire new technologies.

“Companies must determine how they are going to reach their audiences in an increasingly digital market. Look for E&M deal volume to continue to outperform the broader market in 2011 as media companies complete more middle-market acquisitions,” Rooney added.

More than 200 entertainment and media deals have already been announced for 2011, headlined by the recently approved NBC Universal joint venture between Comcast and General Electric.

Deals backed by private equity increased to 140 in 2010, from 126 in 2009, while the number of entertainment and media companies filing for Chapter 11 bankruptcy declined to 21 in 2010, compared with 30 in 2009. Eleven of those 21 companies filing for bankruptcy last year emerged out of bankruptcy during the year.

“Fast-tracked emergences illustrate a continuing trend toward pre-packaged bankruptcies, which offer quick processing and are perceived to be less costly and less damaging to a company's asset value,” Rooney said.

PricewaterhouseCoopers’ findings are based on research from Thomson Reuters, Capital IQ, Bankruptcydata.com, Standard & Poors, Preqin, Bloomberg and PricewaterhouseCoopers’ report “Global Entertainment and Media Outlook: 2010–2014.”

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