04 FLEXIBLE, VERSATILE, RESILIENT | MEDIA talk
GLOBAL MEDIA M&A CONTINUED
The number of global media M&A deals declined by a whopping 72% in H1 2020 when compared with the same period in 2019. Across all sectors M&A activity was harshly curtailed as a result of the pandemic, however the precise timing of the decline varied by country depending on the extent and planning of pandemic-related lockdowns. While February was a highpoint for media deals this year, seeing roughly similar activity as in 2019, April marked a predictable low. This trend was replicated across all regions with the slight exception of the Asia Pacific, which saw a quiet January in terms of M&A. There was already scepticism leading into 2020 with some commentators raising the persistent fear of a coming economic downturn. Founded on a cyclical conviction, the relatively long and unperturbed period of growth experienced around the world over the decade leading into this year raised the possibility of a recession, even without the shock of COVID-19 for amplification.
In some ways, the pandemic will have sucked the air out of deal making, but PE could be in a place to resuscitate activity over coming months. Somewhat in contrast to the perception of risk capital, the longer commitment in holding periods may mean that PE offers stability and relatively lower levels of unpredictability such as that being witnessed in public markets at the moment. The much publicised levels of dry powder available to PE firms (estimated to be somewhere in the range of USD $1.5 trillion in January) means they could be well-placed to play a counter- cyclical role. However, the longer the exit window remains closed for IPOs and limited for cash strapped trade buyers, the more pressure limited partners will be placing on general partners to return money, a factor that could drive secondary buyout activity. The pandemic made for a very complex environment for deal-making and the impact was clear in the lower deal volumes and relative lack of big deals. US broadcaster
Tegna, received some interest from PE and trade buyers late in Q1. The Gannett spinout, which reaches around 39% of the US television market through 62 stations, announced that it had received identically valued USD $8.5 billion offers from both Gray Television and Apollo Global Management. Both bidders, however, dropped their respective in response to the prevailing market disruption. The collapse is a stark reminder of the impact that the pandemic is having on advertising revenues, which threaten traditional media as consumption patterns shift. As high streets emptied, the outdoor advertising market, which has seen a relatively busy couple of years, went quiet in H1 2020. Early in the year, reports surfaced around a potential sale of Clear Channel’s European assets as the Texas-based firm began to explore ways to alleviate its debt burden. In the past, outdoor leader JC Decaux expressed interest in acquiring Clear Channel either in whole or specific regional assets making a break-up of the company along regional lines one possibility.
Made with FlippingBook HTML5