Media and Entertainment Sector Prepares for M&A Surge After 2023 Slowdown

M&A in the entertainment sector: Following a lacklustre year in 2023, the Media and Entertainment (M&E) industry is gearing up for a potential uptick in mergers and acquisitions (M&A) activity. Industry insiders anticipate a revival, spurred by promising shifts within various segments.

Despite last year's subdued performance, there are indications of a turnaround as strategists adopt a more optimistic outlook. Notably, the real money gaming sector is stabilising, suggesting a move away from cautious approaches.

Traditional media, particularly television, remains a dominant force in deal value, pointing towards sustained momentum moving forward.

“2024 will have challenging trends as far as ad-supported revenue is concerned, however, we expect a steady growth in music subscriptions in India. In 2023 only the top theatrical successes gave a push to music consumption, and 2024 could see similar results. 2024 will provide opportunities for M&A and strategic partnerships,” Vivek Raina of Believe Digital said. 

Segment Analysis

New media experienced a surge in deal volumes, comprising 86 per cent of transactions, though accounting for only 35 per cent of total deal value. On the other hand, traditional media, especially television and film, commanded a significant 65 per cent share of deal value.

Television Segment Dynamics

The fallout of the Zee-Sony merger and the impending Disney-Viacom18 deal is anticipated to stimulate heightened M&A activity within the television sector. This is expected to lead to consolidation, particularly in regional and digital sectors, in a bid to manage escalating sports rights costs and safeguard market share.

“The television segment is expected to see considerable M&A action, to protect and grow market share, in the aftermath of the Zee-Sony merger being called off and the impending merger between Disney with Viacom18.  The domino effect is likely to trigger a further consolidation wave, especially in the regional and digital segments, and to manage the rising cost of sports rights,” the EY and FICCI report stated. 

Digital Media and Online Gaming

These segments witnessed robust deal volumes, signalling a growing interest in investments within digital entertainment platforms. Despite television's dominance in total deal value (63 per cent), digital media and online gaming are significant drivers of M&A momentum.

Market Trends

Although 2023 experienced a slowdown in M&A activity, the industry outlook remains positive for increased deal-making in the near future. Traditional media continues to play a crucial role, driving significant deal values despite the overall downturn. Furthermore, private equity (PE) and venture capital (VC) firms retain their prominence in M&E transactions, signalling sustained interest and investment in the sector.