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Deal activity in the media and telecommunications sector continued to be constrained by the prolonged impact of higher interest rates and uncertain regulatory dynamics in the first half of 2024. While announced deal values rebounded slightly from 2023, deal volumes experienced a further decline. Despite that downturn, the sector continues to attract interest as market players continue to evaluate ways to refine their strategies and infrastructure to meet evolving consumer demands, including:
Note: The primary M&A data source used in the midyear outlook is S&P Capital IQ.
After being sidelined by higher borrowing costs, private equity investors are eager to get back into the game and have shown a renewed interest executing megadeals in the sector. In April, Silver Lake announced an agreement to acquire Endeavor in a take-private transaction with a $25 billion enterprise value. In a consumer-centric environment, we expect private equity investors will continue to find attractive acquisition targets in the sector.
Corporate entities are sitting on significant cash reserves in addition to their stock; once the deals market turns around, we expect the already high valuations to further increase as wider pools of buyers have access to capital, spurring more players to evaluate M&A.
“Amid rising inflation, value perception is key to curb churn and uphold pricing. Though M&A faces challenges, companies with engaging solutions at the right price point will be well-positioned to thrive.”
In an increasingly consumer-centric ecosystem, companies are focused on finding the most efficient means to reach their target audiences through advertising. We expect an increased emphasis on leveraging emerging technologies to drive investment in adtech.
While the media and telecommunications sector continues to face significant obstacles due to economic uncertainty and regulatory challenges, we expect consumers’ increased focus on streaming, AI technologies and experiential entertainment to spark renewed interest in the sector.