h2 2020 | media talk 22
media talk | h2 2020 23
SPOTLIGHT ON THE US
HOTVEHICLE: SPACs SPACs surged as a vehicle for deals in 2020, raising nearly $80 billion, up from $13.6 billion in 2019, according to Yahoo! Finance. In January, CNBC reported that a number of major media companies, including Group Nine Media, Bustle Digital Group, Vox, Vice and Buzzfeed, were in talks to consolidate and then go public via a SPAC. With ample targets on the market, 2021 looks to be another big year for SPAC deals in the media and entertainment sector. While this approach to scale is different than the many mega-mergers seen in 2019, these new companies will contend with scrutiny in the public markets and will need to ensure strong governance and financial reporting compliance are priorities alongside growth. Though a relatively small portion of the SPAC funding targeted companies in the media sector (around USD $4 billion), such vehicles may well become more commonplace in the world’s foremost media market. For example, in October Mountain Crest Acquisition Corp announced its acquisition of notorious publishing and programming company Playboy Enterprises, a combined entity with an estimated market cap of more than USD $370 million.
HOT SECTOR: PODCASTING Surging demand for content and
entertainment was a consistent trend in 2020 for consumers who spent more time at home than ever before. That trend will carry into 2021, and podcasting is one sector that is sure to benefit. Podcast listeners have grown by 37.5% in just three years, according to Edison Research, and listenership has likely not yet peaked. On Apple’s platform alone there are 1.75 million podcasts and counting. Streaming music giant Spotify is also seeking to be a leader in podcasting. In 2020, it signed several major deals, including for The Ringer ($196 million), Gimlet Media ($230 million), Anchor, Parcast and Megaphone, to bolster its content and enhance technology. Spotify also inked exclusive deals with Joe Rogan ($100 million), Prince Harry and Meghan Markle ($54.5 million), the Kardashians and others. Similar to the streaming video platforms, exclusivity is a top goal for strategic deals due to the competition in the space. Podcasting is also likely to be an attractive market for PE investment, given that so many are built on a subscription model and there is potential for licensing and royalty revenue on top of traditional ad sales.
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