h2 2020 | media talk 12
media talk | h2 2020 13
UK MEDIA M&A HOT SECTORS
Taken together, advertising and marketing services made up the largest media subsector for M&A deals in the UK in H1 2020. Though deal making slowed in the second half of the year, the two still accounted for 28% of media M&A overall. For advertisers to cope with uncertainty they need the flexibility to efficiently measure, target, and adapt messaging, so many deals unsurprisingly focused on the ability to generate timely content and/or enhance programmatic capabilities. Late in the year, for example, two award-winning independent programmatic agencies came together as US-based Kepler Group announced the acquisition of UK Infectious Media for an undisclosed consideration. In October, digital agency Jellyfish Group announced two acquisitions to expand its Latin American presence. Reamp and San Pancho, acquired for undisclosed amounts, are data-driven players that will enhance Jellyfish’s programmatic capabilities as well as provide greater market access.
approach to development as well as contributing to geographical reach. S4 has kept the momentum up into the New Year, with the announcement of two takeovers in the first week of 2021: Decoded, a New York-based creative agency will be merged with MediaMonks, while San Francisco-based Metric Theory will become part of MightyHive. Though big agencies will continue to rely on scale in order to compete, WPP has also looked to spin-offs (as with 2019’s Kantar deal) and potential divestments as part of its strategy. But acquisitions are still part of the plan: in September, for example, Wunderman Thompson (a WPP agency itself formed in 2018 by consolidating two other WPP agencies) announced the acquisition for an undisclosed amount of France-based Velvet Consulting. The latter’s expertise in multichannel consumer engagement demonstrates WPP’s commitment to enhancing its own digital capabilities. Broadcasting and content accounted for 27% of all media transactions in 2020, boosted by a slew of deals announced late in the year.
As businesses trimmed their budgets in 2020, it was a challenging year for the likes of ad-agency giants WPP, Omnicom, Denstu and Publicis. Not only that, but the ongoing challenge from creative consultancies and digital-first offerings like S4 Capital kept the viability of the holding company model under investor scrutiny. S4 came into 2019 on the back of a wave of acquisitions and just kept on going, despite the logistical issues thrown up by the pandemic. In September, S4’s content arm MediaMonks announced that it had acquired Dare.Win, an award-winning Parisian digital creative agency. Dare.Win counts some big names among its clientele, and the deal will expand MediaMonk’s geographical reach into Europe’s third-largest advertising market. Only days earlier, S4’s programmatic wing MightyHive announced its acquisition of UK-based analytics consultancy BrightBlue. Around the same time MightyHive also acquired Amazon agency Orca Pacific, enhancing an already well-established relationship with Amazon. All deal values were undisclosed, but follow S4’s pillared
Archant, the UK’s fourth-largest local- newspaper publisher with a 150-year history, felt the full force of this transition in 2020, as it sought financial support in the form of a Company Voluntary Agreement (CVA) to continue its operations. Rcapital acquired a 90% stake in Archant in September for an undisclosed fee, and was joined by the Pension Protection Fund, which absorbed the pension liability, reportedly GBP £50 million, plus the remaining 10% share of the business. The deal means Archant can continue to operate while affording its creditor some breathing-space, but it highlights the parlous state of local newsprint media, a condition only exacerbated by the pandemic. No surprise, then, that the future of publishing looks set to depend on the converging paths of digital transformation and consolidation. Regional owners such as JPI Media have launched digital acceleration programmes to begin the process of converting their print titles, following the success of digital-only titles like The Independent, which grew revenue by 12% in 2020. The Independent embraced digital early, and appears to be reaping the rewards.
As consumers around the world were forced to stay in, and the streaming wars raged on, demand for content remained strong. Silverback Films, a leading UK natural-history producer responsible for the landmark Netflix series Our Planet, was acquired by All3Media for an undisclosed fee in December. Silverback Films will sit alongside over 40 other production and distribution companies in All3Media’s portfolio. In the same month, Discovery Communications, which acquired All3Media in a 2014 joint venture alongside Liberty Global, announced the launch of a new streaming service Discovery+. Having produced films for Discovery in the past, the deal secures access to more content for the new streaming platform in years to come. The drop in ad revenue wasn’t just bad news for advertisers. Media companies reliant on advertising spend, including news publishers, were also forced to tighten their belts. Print advertising was especially hard-hit globally, falling by 25% in the year according to GroupM. It was especially tough on traditional newsprint in the UK, which was already fighting waves of increasing digitalisation and changing habits in news consumption.
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