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M&E companies consider M&A in their search for growth amid rapid disruption

Global Capital Confidence Barometer| Media and Entertainment | 16th edition

Media and entertainment (M&E) executives have become accustomed to the various factors affecting their businesses: ongoing digital transformation, changing customer behavior and preferences and accelerating sector convergence. They are becoming more agile at reassessing and reinventing their businesses in order to respond to – and to capitalize on – these forces. They are looking at a variety of deal types to thrive amid the changes, including cross-border and cross-sector deals, joint ventures and alliances as they seek growth, access innovation and acquire talent.

M&E executives bullish on the state of the acquisition market

M&E executives are positive about the general economic outlook and the acquisition market. Sixty percent expect improved economic growth in the next 12 months and 57% intend to actively pursue acquisitions during that time frame. In fact, 50% of executives said they have three or more deals in the pipeline and 47% expect an increase in their current pipeline over the next 12 months.

Portfolio reviews increase, leading to deals, JVs, alliances and outsourcing

Companies are looking at their business structure more often, with 70% of executives saying they have increased the frequency of the portfolio review process to capitalize on disruptive forces. These reviews are leading to a variety of deals, with 46% of executives saying they plan to enter into alliances, M&A activities or joint ventures with other companies to create value from underutilized assets.

At the same time, 52% say they plan to outsource any routine operations or back-office functions in the next 12 months.

Cross-border deals, activist intervention spur M&A

M&E executives expect to pursue a greater number of international acquisitions as they look to buy into pockets of growth or secure supply chains in an era of geopolitical and policy uncertainty, with half of executives citing cross-border dealmaking as among the top three themes of M&A in the next 12 months and 24% saying it will be THE main theme.

The US, UK, China, Germany and France are the top five destinations where companies say they are likely to pursue acquisitions. Meanwhile, 16% cite an increase in activist investor intervention in M&A as a main theme, as activists put pressure on boards to negotiate deals.

Survey reflects awareness of geopolitical uncertainty

More than two-thirds of executives (69%) cite a broad range of geopolitical or emerging policy concerns as the greatest risk to their business. Government intervention and policies — from trade to the movement of labor — now collectively top the macroeconomic concerns of global executives.

Cybersecurity threats are also an issue, with 10% of executives naming that the greatest economic risk. But at the same time, executives also see a sense of stability in capital markets, with 90% seeing short-term market stability improving or remaining stable, and 98% seeing the same for corporate earnings.

EY - John Harrison

John Harrison

EY Global Media & Entertainment Leader

Transaction Advisory Services

+1 212 773 6122

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