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Merger Activity Driven By Shift to Streaming: PwC

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(Image credit: Klaus Vedfelt/Getty Images)

After COVID-19 slowed merger and acquisition activity in the media and telecommunication sector during 2019, deals will be driven by a shift to streaming, according to a new report from PwC.

As big entertainment companies followed consumers’ new consumption patterns, the will want to acquire or develop content, particularly as they expand internationally and require more localized content to compete.

The report noted that cloud and app-based services, digital publishers, podcasting and video game publishers have all become more attractive acquisition targets as advertising budgets became focused on digital mediums and consumers turned to at-home.

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(Image credit: PwC)

On the other hand, businesses that rely on in-person audiences or production and traditional advertising could become takeover targets as their need for funding grows.

“While the Media & Telecom sector was able to pivot to a virtual marketplace during COVID with relative ease, there is no doubt that people miss the personal experiences generated through live events, and we anticipate a full recovery post-COVID. We wouldn’t be surprised to see legislation, regulations and depressed valuations assist in this recovery,” said Bart Spiegel, US Media & Telecom Deals leader.

There were 612 announced deals in the media and telecommunication sector worth $99 billion over the past 12 months, according to the PwC report. 

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“Broadly speaking, the sector was one of the most resilient ones during the pandemic, with deal activity remaining largely flat when compared to 2019,” PwC said. The year was off to a fast start, but slowed when the pandemic hit.

The pandemic forced companies to reconsider their core strategies. Large companies pushed their digital strategies, including streaming, data driven advertising and building 5G networks. Those companies also divested non-core assets to generate cash.