Tech, Media, Telecom Deals Surged in Q1

The technology, media and telecom deal market made a first-quarter comeback, fueled primarily by Comcast’s $68.5 billion takeover of Time Warner Cable, making up more than 40% of total M&A transaction value, according to research firm Mergermarket Group.

Facebook’s $16 billion buy of mobile messaging company WhatsApp and Liberty Global’s $11 billion acquisition of the remaining interest in Dutch cable company Ziggo, the two other biggest deals in the quarter, also qualified as being in the TMT sector. Overall, the first-quarter total deal value of $277.8 billion was the highest it has been since the same period in 2007.

TMT deals made up 41.4% of the total, ahead of the prior year, when TMT deals accounted for 30% of total deal value.

Ed Mullane, Mergermarket sector editor for the Technology, Media & Telecom Group, said he believes there is continued M&A growth in the business. At least initially, though, deals will focus on larger transactions and will be largely dependent on the regulatory climate.

“The big deal that a lot of people want to get done is Sprint/T-Mobile,” Mullane said of the wireless giants. The big issue is whether regulators will stand for a reduction from four nationwide wireless providers to three, he said.

The average size of deals is growing. According to the Mergermarket M&A Trend Report: Q1 2014, the average M&A deal in the U.S. in the first quarter was $632.8 million, the highest level since 2009 (average $782.9 million). That year, Comcast acquired its controlling interest in NBCUniversal from General Electric.

Technology had the highest quarterly value in more than seven years ($38.1 billion), while the telecom sector — which includes the Comcast/TWC deal — at $71.8 billion was nearly 10 times the value it reported in the first quarter of 2013 ($7.3 billion).

Mullane said if Comcast/TWC passes regulatory muster, it could spark additional deals in the sector. Chatter surrounding a possible union of satellite-TV providers Dish Network and DirecTV could also encourage deals. While some analysts have said Dish could be trying to prod AT&T into making a play for the second-largest satellite-TV provider, Mullane isn’t convinced.

He pointed to speculation earlier this year that AT&T would buy European wireless giant Vodafone. “The market didn’t respond very well,” he said.