M&E Connections

PwC: Expect More Cable Deals in 2016

By Chris Tribbey

The overall value of entertainment, media and communications deals was up 13% to $149 billion in 2015, according to a new report from PricewaterhouseCoopers (PwC), with the Charter Communications acquisitions of Time Warner Cable and Bright House Networks (for $56 billion and $11 billion, respectively) accounting for a full 45% of that total.

However, of the dozen announced cable deals that took place in 2015, only two occurred between July and December, a marked slowdown that should pick up again in 2016, according to Bart Spiegel, partner for entertainment, media and communications deals for PwC.

“Some of the [cable deals] still need to go through regulatory approval and I think there are players in the market looking to see how the government reacts to those transactions,” he told the Media & Entertainment Services Alliance (MESA). “That may be why we saw a slow-down in the fourth quarter, with people in a wait and see mode. You still have tons of cable operators out there in the mid-tier space that could be attractive acquisition targets.”

Both of Charter’s deals are currently being reviewed by federal regulators, with critics labeling the consolidation nearly as bad for consumers as Comcast’s failed $45 billion bid for Time Warner Cable last year.

For 2015, overall deal volume was down 7% (818 deals, down from 886 deals in 2014), with the fourth quarter marking one of the slowest for mergers and acquisitions in recent memory, Spiegel said.

“It was really interesting to see that the fourth quarter deal volumes were down considerably, and when people see that they automatically think there’s a slow down in the market, but we remain optimistic that when it comes to mergers and acquisitions in 2016 volumes will continue at least a consistent pace with 2015. Only time will tell.”

In the broadcast sector, deal volumes were down 42%, with little of the same mass consolidation that was seen in the local TV broadcasting space in 2013. “While radio broadcast consolidation and the acquisition of digital music platforms continue — albeit at a slower rate — the availability of large portfolios of television stations and limitations from the regulatory bodies have put significant pressure on the television broadcast M&A,” the report reads.