Dealmakers in the Technology, Media, and Telecommunications sectors (TMT) are entering 2025 with renewed optimism. This sector’s pivotal role in the AI boom drives investment opportunities, according to recent PwC research. Easing macroeconomic and geopolitical challenges, particularly in the U.S., has also set the stage for a favorable mergers and acquisitions (M&A) environment.
Media M&A market dynamics
PwC’s Global M&A Industry Trends Report notes that the U.S. administration’s focus on deregulation is poised to support megadeals (transactions exceeding $5 billion) and boost executive confidence. Anticipated interest rate cuts by central banks should foster a more vibrant M&A landscape.
According to PwC’s 28th Annual Global CEO Survey, 76% of TMT executives who made acquisitions in the past three years plan to pursue further deals within the next three years. This signals a strong strategic focus on media M&A for growth and innovation.
The evolving TMT landscape presents significant implications and opportunities for the media sector. These include:
1. AI as a growth driver
AI investments transform media content production, distribution, and audience engagement strategies. Premium media companies must harness AI to streamline workflows, deliver personalized content, and improve advertising efficiency.
2. Surge in media M&A activity
Media companies will likely pursue strategic acquisitions with regulatory and economic conditions becoming more favorable. Smart partnerships or mergers with technology firms can enhance digital capabilities and foster AI-driven innovations.
3. Capital spending
Extending capital investment in energy and real estate opens new avenues for media companies. Given these market dynamics, collaboration involving data centers or energy-efficient content delivery networks could become significant.
4. Deregulation trends
A more relaxed regulatory environment may facilitate the way for innovative cross-platform deals and media-tech partnerships. For some, this will unlock new revenue streams.
5. Evolving content and platform strategies
The shift in media consumption—toward digital-first platforms, podcasts, and creator-generated content—requires media companies to reassess their content strategies. Multi-platform distribution and niche content offerings will be critical to staying competitive.
6. Investor confidence spurs media M&A
Reduced macroeconomic pressures and lower interest rates will likely attract private equity investments. This will fuel innovation and expansion for forward-thinking media companies.
AI: a catalyst for investment
AI remains a focal point for investment, particularly in the U.S. In January 2025, a landmark $500 billion joint venture between OpenAI, Oracle, and SoftBank to develop a network of AI data centers. This venture should reinforce the U.S.’s position as a global AI hub.
Companies channeling capital into high-growth areas such as data analytics, automation, and generative AI enhance products to drive future growth. Notable deals in 2024, including Cisco’s $28 billion acquisition of Splunk and HPE’s $14 billion acquisition of Juniper Networks, exemplify this trend.
Regulatory and geopolitical shifts
The new administration is undergoing significant changes in the U.S. regulatory landscape. Appointments to the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC) should foster a more deregulated environment, easing barriers to media M&A. These changes may have global implications, influencing deal activity in other regions.
After a prolonged period of high interest rates, central banks expect to implement gradual rate cuts in 2025. Lower borrowing costs will likely invigorate financial sponsors, reversing the trend toward corporate-led deals and a resurgence in private equity investment.
Media industry evolution
As the media landscape transforms, digital-first platforms necessitate strategic portfolio assessments. As companies adapt, transformative M&A, including divestitures of non-core assets, is likely. Vivendi’s recent restructuring and Comcast’s strategic moves exemplify this trend.
The Technology, Media, and Telecommunications sectors (TMT)sector is ready for a resurgence in M&A activity in 2025. The convergence of AI-driven innovation, regulatory shifts, and capital market dynamics creates fertile ground for strategic acquisitions. Those media businesses that are agile and responsive will seize new opportunities and navigate well in this dynamic landscape.
Last week, over 400 attendees from 43 countries descended upon the Portuguese seaside town of Cascais for the 45th FIPP World Media Congress. They heard from more than 70 international speakers on a range of topics.
Here are three key themes that caught my eye from among the many insightful talks, demos, and individual conversations that I enjoyed over the course of the event.
1. It’s all about AI
Not surprisingly, it was impossible to ignore artificial intelligence. AI was mentioned in every session, reflecting AI’s dominance in shaping media strategies and operations, as well as the speed with which it is developing.
Despite universal interest, media companies and publishers are at different stages of their journey with this technology.
Jan Thoresen in discussion with Damian Radcliffe at FIPP World Media Congress. Photo credit: Reidar Hammerfjeld
Bonnie Kintzer, president and CEO of TMB (Trusted Media Brands) explained how the company is “leaning into AI and Machine Learning.” They have set up an internal task force to help understand the risks of AI, as well as identify the best ways to use AI tools to grow their business.
For others, AI is already at the heart of what they do. Jan Thoresen, at Labrador CMS shared how AI was baked into their platform. With an emphasis on productivity and improving workflow, their content management system uses AI to create headlines, metadata, and tags, as well as produce story summaries.
“We try to make the tech disappear for the journalist,” he said. “Breaking news can´t wait,” he told us, “and you can´t wait for a developer or designer to deliver special effects. The tools have to be at the fingers of your reporters and editors.”
Juan Señor, President of Innovation Media Consulting, outlined what he sees as the transformative power of Generative AI. He predicts this technology will transform digital and create “AI-first” media companies. That may mean that “AI-first” becomes the new “digital-first,” essentially meaning companies prioritize–and seek to tackle challenges, opportunities and processes–with an AI solution at its heart. (FWIW: It’s an approach that Richard Heimann’s book Doing AIcautions against given concerns that companies may have with the solution, rather than the problem they are trying to solve.)
Aside from AI-generated content (images, text and videos), he anticipates other opportunities for publishers. “AI will never find the news, AI will never find the stories,” he told delegates. In fact, with this technology potentially ushering in a new era of fake news, Señor stressed the value of verification, trust and objectivity; areas he believes that publishers should lean into.
He also cautioned about some of the potential pitfalls.
“AI will supplant social and search,” he predicts. On that front, he emphasizes the importance of ensuring that publishers protect their IP, especially from scraping by AI tools. Others—such as the music industry—are already further advanced in tackling this issue.
Señor also recommended content creators learn from past mistakes. That means not getting into bed with tech companies on the promise that a revenue model will be worked out down the line. “We cannot rely on someone else’s platform to build our business,“ he cautioned.
2. Understanding your audience is paramount
Juan Señor Photo credit Damian Radcliffe
Connecting with your audiences was another thread that ran throughout the event. This is essential not just for acquisition and retention, but also for revenue diversification.
Dr. Jens Mueffelmann, Executive Chairman of Bonnier, talked about how the company had developed its Marlin property to “move beyond a $10 magazine.” As part of this, he outlined the importance of their multichannel offering and the creation of new income streams under the “umbrella brand” of Marlin Expeditions.
This includes large-scale fishing tournaments, several of which featured participants with an average net worth of $10 million, as well as smaller expeditions. The success of these ventures is such that between 2020-2022, media accounted for just over a third (34%) of Marlin’s revenues. Tournaments, in contrast, generated 55% of their revenue.
As a result, earlier this year, the company created a new structure “built around brands and communities instead of products.” This includes the creation of a new “Marine Division” which oversees all print, digital and broadcast assets in this space, as well as relevant tournaments and expeditions. As Mueffelmann wrote on LinkedIn, when sharing these developments, “First the vision, then the strategy and now the structure…..as taught in business school.”
At TMB, revenue diversification comes in many forms including advertising, commerce, production and licensing. But the relationship with the audience is integral to many of these efforts.
Dr. Jens Mueffelmann Photo credit: Damian Radcliffe
The century-old company’s tagline is “Content. Inspired by You.” Many of its properties rely on audience-generated content. Therefore, it is integral to nurture and nourish those relationships.
For example, Taste of Home’s recipes are supplied by home cooks. And across their portfolio of brands, more than 350k people submit content ranging from videos to photographs, tips (e.g., Family Handyman) to jokes (Reader’s Digest), and more.
Relationship management also shapes revenue strategies as well as editorial. TMB’s affiliate revenues are up 72% year-on-year, but all of this content is written by their editors, not PRs or AI. “When you have the trust of your audience you must be careful to preserve that trust,” Kintzer said.
For Kerin O’Conner, Founder and CEO of the consultancy Atlas and a former CEO at Dennis Publishing, a focus on audience means the “customer must sit in the middle of your business model.”
Discussing recurring revenues, O’Conner pointed to the rise of the subscription economy and its implications for media companies. He observed that “subscription income is more consistent than other forms of monetization.”
Subsequently, media companies should focus on building long-term relationships with subscribers. “We need to be really good at relationships and understanding what we mean to our customers,” he advised.
3. Acquisitions can be integral for growth
There are multiple ways to grow your audiences and revenues. However, launching new products and verticals can be fraught with risk—and costs. One idea which emerged in multiple sessions was to reduce these potential pitfalls through partnerships and acquisitions.
This can take multiple forms. You can, for example, acquire an audience for a day, or even an article.
Juan Señor, noted the return of micropayments in the form of day passes. “We gave up on them [micropayments]. Now they’re coming back,” he says, outlining how this model can be a means to establish a relationship with audiences.
Pet Collective
https://www.youtube.com/watch?v=VAH-ixdFWFs
In turn, this has led to the creation of new FAST (Free Ad-Supported TV) offerings and expanded TMB’s footprint on different social media channels. And with much of this content also user-generated, it’s also created further revenue opportunities in the form of licensing, as well as ads on their new digital TV channels.
Acquisition goes beyond acquiring other companies and its online properties. It lies at the heart of growing this part of the business too. To help TMB continue to build their clips library, they have teams around the world (in LA, India and Romania) looking at—and then acquiring—social content.
Kintzer revealed that the company has paid out over $30 million over the last decade to clip owners. In turn, clips are being licensed by TMB for use in commercials for Cheerios, Huggies, Coca Cola, and others. Deepening this archive also creates more possibilities for streaming, video production and social video, too.
Looking Ahead: interrelated trends to watch
AI will likely continue to dominate the conversation for the next 12 months and beyond. Earlier this year, IAC chairman Barry Diller said that media publishers should sue AI companies to protect their assets.
At FIPP, Lexie Kirkconnell-Kawana, the new chief executive of Impress UK, an independent press regulator, also emphasized the accuracy of generative AI (and the opportunity this may present for publishers). Alongside this, she also spoke to the challenges of determining copyright and “fair use” that we can expect to see play out in the near future. “We may see a wellspring of copyright regulators emerge in response to this,” she predicted.
Meanwhile, Madeleine White, co-editor-in-chief at B2b site The Audiencers and Head of International at the membership and subscription platform Poool, stressed the continued importance of registration strategies. This can help you get to know your audience and also increases the likelihood of converting visitors into subscribers. Using AI, in the form of a dynamic paywall, with the fashion magazine ELLE, White revealed that free registered members are up to 40x more likely to subscribe.
Lastly, Reid Deramus, Growth PM at Substack, noted how the leveling of the tech-stack had made it easier for small companies to do everything from collect payments (e.g. through Stripe), create good-looking content (with a good CMS) as well as reach audiences through channels like newsletters.
“It’s never been easier to pick up your iPhone and start your own media business,” he said. Because of this, it’s not just AI that’s a potential threat to publishers. You need to work hard to acquire, keep and develop talented staff.
“A lot of people who come to Substack felt like they couldn’t be themselves,” he said. To avoid hemorrhaging good people he encouraged companies “to find ways to motivate” some of their top performers. “Give them creative freedom,” he said, “keep them motivated financially… and let them have a seat at the table.”
The big picture
As we delve into the trends shaping the media landscape of Summer 2023, it becomes clearer than ever that media executives need solid strategies in three key areas: AI, audience, and acquisitions.
Artificial intelligence is revolutionizing workflows. However, it is also offering a number of IP challenges that we must address. Simultaneously, enhancing your knowledge—and relationship—with audiences is integral for growing subscriptions and reader revenues, including maximizing the relationships you already have. And the art of acquisition can encompass everything from other companies to UGC, as well as creative talent and new audiences.
Having strategies for these areas in place can help media organizations unlock areas of innovation and growth during a period that promises to be as transformative, and tumultuous, as any in recent memory.
Streaming is popular but competition is fierce. It seems like every major network and media company has launched a streaming service.
Last week, Netflix released its 4Q 2021 earnings. The company closed the year with 221.8 million subscribers. However, Netflix fell short of its Q4 new subscriber forecast. Pivotal Research Group analyst Jeff Wlodarczak comments that streaming services are adjusting to the new norm of subscription growth compared to the accelerated sign-ups witnessed during 2020’s lockdown. Wlodarczak believes, “Streaming is not over; it is the future.”
A number of industry analysts have identified strategies and offer insight into the streaming marketplace’s next steps.
International growth
MarketWatch points to global programming investment as a top priority for streaming services. And the investment in content only bears this out.
Netflix’s hit series from South Korea, Squid Game, is one of many international success stories and a clear winner for the platform. Expect more foreign-language series to be developed as Netflix turns international growth, especially in Asia, India and Latin America.
Amazon’s Prime Video will offer more programming in India’s Hindi, Tamil, and Telugu languages. It’s India service registered tripled its viewing hours over the past two years there.
Apple TV+ will debut its first Russian-language show, the thriller “Container,” in the spring.
Disney+ plans 50 Asian originals by 2023, as it expands to South Korea, Hong Kong, and Taiwan.
HBO Max debuts in Europe in early 2022.
Paramount+ also debuts in South Korea and Western Europe.
Peacock expanded to Europe (on Sky platforms), with more than 50 Spanish-language projects with Telemundo.
Mix and matching viewing strategies
While Linear TV marathons introduced us to binge viewing, Netflix’s flexible nature made it an everyday behavior. TheRinger identifies the different episode distribution strategies to keep viewers engaged and coming back to view more. As noted with Netflix, flexibility is essential and a reminder that different approaches offer different results. A buzz-worthy binge (all episodes released at once) can be great PR for a new series release. Additionally, a scheduled infusion of new episodes can draws viewers back week after week.
Apple TV+ offers a “demi-binge” strategy, debuting with a batch of three episodes, then airing the remaining seven one at a time.
WarnerMedia’s HBO Max uses a hybrid approach, breaking up seasons into packs of two or three episodes released over several weeks.
Interestingly, Peacock’s promotes binging but at higher pricing for specific series. Seasons 1 and 2 of The Office are available at the lowest-priced monthly subscription price of $4.99 a month. To unlock every episode, extended cuts, never-before-seen-footage, and watch commercial-free, consumers pay $9.99 — the highest tier.
Amazon’s The Marvelous Mrs. Maisel will switch from releasing all eight episodes at once to two a week for four weeks. Fear not, the binging release strategy is far from over. Rather, this is simply different viewing models in play. And they are not necessarily mutually exclusive.
Merger, acquisitions, and differentiation
As Netflix invests in gaming, Amazon looks to its NFL and Thursday Night Football. Both are clear points of differentiation. Other services look to corporate and sibling-studio deals to offer HBO Max, Peacock, and Paramount+ access to new movies releases 45 days after they open in theaters.
CNBC Tech Reporter Alex Sherman points to the significance of mergers. He believes that Paramount+ and Peacock won’t last as standalone streaming services, and a merger is likely in their future.
Discovery Inc.’s acquisition of WarnerMedia (expected to be complete in mid-2022) will combine the streaming platform of Discovery+ and HBO Max. Combined, they will have approximately 100 million subscribers.
Streaming platforms are making significant investments in new and innovative content and unique deal-making to differentiate themselves from competitors. They need to keep their customers consistently engaged, especially as consumers begin to reevaluate their multiple subscriptions to access the content they want to watch.
Most digital news publishers registered growth in subscription and advertising revenues in 2021 as compared to the prior year. And, according to Reuters’ Journalism, media, and technology trends and predictions 2022, close to three-quarters of publishers (73%) are optimistic about this year. To understand future trends in news publishing, Reuters surveyed 246 executives in 52 countries during November and December 2021. The participants were senior-level employees in digital media strategies at news publishers.
Building scale
As publishers look to the future, scale is essential for most. These companies see a future with a mix of models to grow revenue including subscription, advertising, ecommerce, and events.
Pure plays look to scale: Digital publishers are acquiring and merging to give them more leverage with advertisers and to compete with the dominant tech players of Facebook and Google. Buzzfeed’s purchase of Complex and Vox’s acquisition of Group Nine are recent examples of this strategy. Publishers expect more mergers and acquisitions in 2022.
Traditional media looks to digital acquisitions to drive growth: Large traditional media players have focused on the acquisition of digital brands to add value to their subscription bundles and target a growing digital audience. Axel Springer’s purchase of Politico and the New York Times’ plan to buy subscription-based sports site, The Athletic, are two prime examples. These acquisitions are solid plays to drive audience growth with digital audiences.
New models fuel local start-ups: At a local level, low-cost reader-focused start-ups are using newsletter platforms like Substack to attract audiences. Digital newsletter companies are also building local footprints. For example, Axios is expanding its newsletter-led model to 25 cities this year.
Audience strategies and innovation
Publisher efforts this year focus on podcasts and other digital audio (80%), building and improving newsletters (70%), and developing digital video formats (63%). Publishers are focusing on new audio formats such as audio articles, flash briefings, audio messages, and live formats such as social audio.
New audio initiatives (e.g., Clubhouse, Twitter Spaces, Facebook’s Live Audio Rooms, Reddit Talk) show audience interest in audio discussions. However, executives are unsure how engaged audiences are long-term in these pop-up, discussion-based experiences. More content also means more competition and a need for more content moderation.
Still, publishers see audio as strategically important. It can deliver reach, loyalty, and revenue. Some publishers want to own the audio experience to control the full customer experience. The New York Times purchased Audm, an audio narration app, and they plan to launch a listening product this year.
Publishers also want to engage with younger audiences. They have a renewed interest in short-form video and look to native video formats to attract Gen Z. They are also using third-party mobile-friendly online video platforms to target Gen Z. Executives report that more effort is going to visual distribution and engagement platforms like Instagram (net score of +54), TikTok (+44), and YouTube (+43), and less effort into general-purpose networks like Twitter (-5) and Facebook (-8). Even with a renewed video interest, many news publishers still question the monetization strategy of short-form social video.
News publishers need to develop deeper relationships with audiences. In particular, they must reengage the disaffected and target the young adults. This year, innovation is an important cornerstone to attract new readers, with publishers investing in new audio formats and short-form videos. Investment is essential to build the future Web 3.0 experience.
As the year comes to a close, we always get the reflexive compulsion to look back and take stock of what happened and consider what’s to come. And this year truly brought a sea change on a number of fronts in digital publishing. Facebook and other tech giants stumbled mightily from one PR disaster to the next, culminating in top executives literally telling Congress that they expect to be regulated. Who would have imagined that?
And the old, sad chase for eyeballs might finally be laid to rest, as digital pubs pivoted away from video, away from chasing mass audiences via social media, and toward reader revenues and putting the audience first. And while the digital ad duopoly of Facebook and Google face headwinds of regulation and a public backlash, Amazon is expected to make it a “triopoly” as their ad growth is skyrocketing.
Here are the media trends that made the biggest difference in 2018 and what to watch out for in 2019:
1. Facebook and Tech Giants Lose the Plot
It’s a lot easier to talk about what’s wrong at Facebook than what’s going right, and that goes doubly for its relationship with publishers. At the beginning of the year, Facebook changed its News Feed algorithm to downplay news pages and then saw its own usage flatten over the year. Things got worse when Facebook forced publishers to go through a verification process just to boost posts with political stories. Even at South by Southwest, a techie’s fevered dream, the “techlash” was in full effect with entire panels devoted to attacking Facebook.
Even worse for the technology behemoths was the continued pushback from regulators in the EU and U.S., including a rare bipartisan rebuke against executives. While Republicans and Trump have alleged anti-conservative bias at Facebook and Google, many others believe they need stronger regulation around privacy, especially after so many scandals related to politics (see Cambridge Analytica) and data leaks (see Facebook’s not-so-private photos). Expect more backlash and more regulation to come.
2. Amazon Joins the ‘Triopoly’
And if you’ve grown tired of the exploits of the digital ad duopoly, rest assured you have a new tech giant to worry about: Amazon. The Seattle behemoth has quietly slid into third place among digital ad purveyors and is set to grow a whopping 400%+ per year to grab 15% of U.S. market share by 2020, according to eMarketer. And the signs have been growing about Amazon’s dominance all year, from the time they beefed up agency and marketer support to the point where they had a scandal over sponsored wedding registry listings. Let’s celebrate another player to give Facebook and Google a run for their money – as long as they play fair.
3. Media Mergers Trump Trump
He tried so hard to penalize CNN. But in the end President Trump failed to block the AT&T purchase of Time Warner, or force a spin-off of CNN (which has been on a money-making tear). Instead, the mega-merger was approved by the courts, and we also saw Fox offload most of its assets, including the 21st Century Fox studio, to Disney, while Comcast skulked away in defeat.
And T-Mobile and Sprint passed their final hurdles to merge in 2019, leading to only three major mobile services in the U.S. They promise to cut prices for consumers, but less competition usually results in higher prices overall. How will all these huge mergers play out in 2019? For the media companies, it’s all about taking on the disruptive tech giants moving into entertainment and streaming. For the wireless carriers, it’s about moving toward speedier 5G to give us faster streaming (at higher prices). All those trends will come together as Disney unleashes its new streaming service next year.
4. The Digital Media Reckoning Continues
This year just reinforced growing trends in 2017, that will likely continue into 2019: Digital-only publishers cannot rely heavily on advertising or even sponsored content. Without diversified revenue streams, and especially reader revenues (subscriptions, memberships, etc.), most of these former darlings will end up hallowed out, like what happened to Mashable before and Mic recently. Even BuzzFeed had to move toward an NPR model, asking for $5-a-month memberships to support its news operation – complete with the cliché tote bag reward.
BuzzFeed CEO Jonah Peretti is calling for more consolidation. But most importantly, publishers need to put the audience first and take a user-centric view of sustainability. As Politico’s Tyler Fisher wrote in Nieman Lab:
“With a business model focused on reader revenue, the entire company can set its sights on making the best journalism product possible for the reader … The smartest of smart newsrooms will take one more step in their path to sustainability: They will become a trusted institution in their communities by respecting their users’ time, intelligence, and privacy.”
5. Snapchat, Flipboard, Pinterest Rise as Facebook Falls
As Facebook took a tumble this year, others stepped into the void and took advantage of the social giant’s missteps. The most ironic beneficiary was Snapchat, which had taken a beating from Facebook with copied features (ahem: Stories). The company stepped up its game by letting marketers target publishers in Discover and letting publishers use non-exclusive content in Discover. Even old stalwarts like Flipboard and Pinterest saw their stock rise as Facebook fell to earth. Why? As Facebook dealt with misinformation and algorithm angst, Flipboard focused on human curation and Pinterest on lifestyle. Of course, Facebook does own Instagram and WhatsApp, which continue to grow and thrive outside of the parent company’s shadow.
6. Linear TV Under More Pressure from Streaming
As noted above under the “Digital Media Reckoning,” the move toward reader revenues means more ad-free environments, and streaming giants like Netflix and HBO are leading the way. Even Facebook did some research on whether a subscriber-supported ad-free social network would pay off. Meanwhile, cable nets such as AMC Network saw their advertising revenues drop, while distribution revenues soared as they sold content to streaming networks and diversified.
Where does that leave our old friends, the purveyors of linear TV? They’ve had to up their game and innovate with “addressable TV ads” that target people better than mass market TV ads, which are on the wane. And AT&T’s purchase of Time Warner has given the telecom giant a chance to broaden its offerings with more content and data. Linear TV will continue to find ways to battle – and emulate – the streaming upstarts.
7. Podcasts Remain Strong After Some Contraction
Podcasts continue to mature and large publishers such as New York Times and Washington Post are pushing deeper into the audio-on-demand medium. There were some hiccups in 2018, with Panoply dropping its podcasts to focus on being a platform and infrastructure for podcasts. And BuzzFeed also closed its in-house podcast production outfit to focus on long-form video. But there were also signs of continued expansion, as Malcolm Gladwell and Slate’s Jacob Weisberg launched a new podcast company called Pushkin Industries, and iHeartRadio bought podcast producer Stuff Media (which makes “How Stuff Works” and more).
The reality is that as metrics improve, including the NPR-led open source RAD technology, more marketers will jump in and find that podcast listeners can be a very loyal bunch.
Conclusion
With the tech platforms hitting rough spots, this has been a year of retrenchment for publishers, who are taking stock of what’s really working and what’s leading them astray. The days of shiny new objects like VR and blockchain seem to be on the wane, and a laser focus on the user and serving the public are front and center. As VC funding becomes scarce, media startups need to be more practical and strategic. The chase for eyeballs is coming to a close, and now we can think about what’s real for our businesses – and for our communities.
The media M&A market is booming. PwC’s new report, US Media and Telecommunications Insights Q3 2018, finds that deal volumes have reached a two-year high in Q3, registering a 9% increase compared to the same time period one year ago. Beyond sheer volume, the strategic rationale underlying the deal activity highlights the continued importance players are putting on M&A to further their position in this competitive and ever-changing landscape.
This year, many companies put innovation and consumer engagement at the forefront of their acquisition strategy. Beyond the usual motivations, companies are also looking to make acquisitions that include offerings that help them attract, engage and retain customers.
Additional trends this quarter:
New deals do not surpass $5 billion dollars, resulting in a 43% decrease in deal value compared to Q3 2017.
F five deals this quarter are over $1 billion dollars, accounting to $12.4 billion dollars or 69% of total deal value.
The largest deal in Q3 is Adobe’s $4.8 billion-dollar acquisition of Marketo Inc., a cloud-based marketing platform for B2B customers.
The Advertising & Marketing and Internet & Information sub-sectors continue to outnumber other categories in terms of deal volume with 82 and 71 deals, respectively, in Q3 2018.
Private equity deal volumes are growing strongly this quarter, representing 26% of all deals. However, the value of private equity deals shows a 21% decline this quarter.
Deeper Motivations
Significantly, many of the deals in subcategories such as Internet & Information and Advertising & Marketing show that investors are looking to acquire new platforms rather than building them. This is especially true of companies that can easily add a new service to an already existing platform in order to grow their user base. Many companies are also competing for advertising dollars and consumer engagement so they looking to invest in new platforms and new technologies to deliver personal and immersive experiences.
Importantly, new acquisitions this quarter show that companies are responding to changing consumer viewing and listening habits and shifting revenue streams. A new and notable area of growth includes podcasts. The podcast industry is growing substantially. In just five years the audience grew to grew over 325% to 98 million listeners so, or roughly 30% of the US population. In this quarter alone, there are nine podcast deals, four of which involved podcast production companies.
Additional areas for further acquisition exploration include virtual and augmented reality platforms, as well as egames (multiplayer video-game competition platform and alternative content formats created purposefully for smaller screens and shorter attention spans). As these areas continue to grow, the M&A scene is likely to keep growing and be reflective of organizations’ nee to continue to innovate and grow.
There was a time when mainstream consumers would belly up at the cable buffet to feast on 500 channels, no matter the cost. For a time in cable tv: the bigger, the better. But eventually consumers got severe indigestion from ever-expanding bills for channels they never watched. They wondered: “Why can’t I watch (and pay for) just the channels that I actually watch?”
With the advent of streaming video packages from Netflix, Hulu, and Amazon – and more stand-alone services from CBS, HBO, Showtime, and others – consumers finally started getting the “a la carte” option of unbundling. At least they could watch just what they wanted. At the same time, new providers like PlayStation Vue, Sling TV, and DirecTV Now began to offer up popular “skinny bundles,” smaller groups of premium channels at a lower price.
As the choices proliferated for consumers, the question for content providers is how can they keep showing up on these ever-shrinking menus? They need to be everywhere, but that proves challenging for many players. Inevitably, some get left out of the musical chairs at this buffet.
And lately, the channels that are suffering are those from middle-tier programming houses like Discovery and Scripps Networks Interactive, which focus on animals, food, and reality shows. So, it is not surprising that players like these would consider M&A options. Joining forces would allow them to create a new kind of “anorexic bundle” at as little as $3 or $4 a month.
And that was likely a big driver in the recent sale of Scripps, which saw both Viacom and Discovery vying for a buyout. But in the end, Discovery won out, acquiring Scripps for $11.9 billion. It’s not just a purchase of additional content for Discovery — it’s a sizable step for both Scripps and Discovery in securing a place in media’s future.
Consolidation a Panacea?
As cord-cutting continues to become more mainstream, mergers and consolidations are a viable strategy for media companies trying to stay afloat amidst lagging cable subscription revenues and increased streaming options. And mergers show potential for smaller media companies that might be cast aside as well as larger media companies that want to create a more appetizing menu for consumers.
The aim, as Variety’s Brian Steinberg put it, is for these companies to have an upper hand in the ways that consumers connect to their favorite kinds of programming. Think about Comcast’s purchase of NBCUniversal back in 2009. Comcast has since become the powerful presence behind must-see properties like the Olympics, sports, and children’s’ programming.
And that’s just one example. AT&T bought DirecTV in 2015 for approximately $48.5 billion and is about to close a $85.4 billion acquisition of Time Warner, owner of HBO and CNN. Lionsgate purchased Starz in a $4.4 billion deal. Charter Communications acquired Time Warner Cable last year for about $65 billion. The list goes on and consolidation seems inevitable in the chaos of changing viewing preferences. But will the Discovery Scripps combo be enough to get noticed by skinny bundles? Or can its own anorexic bundle attract enough attention to be viable on its own?
The Skinnier Bundle Option
Both Viacom and Discovery announced earlier this year plans to offer these newer, entertainment-only anorexic bundles to try to attract consumers. But at such low prices – $3 to $4 per month – will people really value them enough?
That’s where Scripps comes along. The network has long attracted audiences — and subsequently, advertisers for those audiences — with popular lifestyle programming like HGTV and the Food Network. A Scripps acquisition, ideally, gives both companies a competitive edge when it comes to negotiating with traditional distributors like Comcast and Charter Communications. It also helps cut back-end costs. For Scripps, the acquisition also offers money to invest in better ad targeting. Ad buyers are also looking to media companies to help them better target younger audiences more prone to streaming rather than subscribing to cable.
Challenges Remain
Still, a few analysts argue that a consolidation between Discovery and Scripps — and that mergers in general — may hurt chances of staying afloat. This is because they add even more programming when distributers are looking to cut content and offer more streamlined options. And neither Discovery nor Scripps air live sports in the U.S., which has long been considered one of the remaining driving forces behind television advertising.
One analyst, Michael Nathanson, was skeptical about the pairing. He told The New York Times’s Emily Steel that, ”This shotgun marriage is a clear sign that the cable network industry has seen the future, and that future requires deep cost cutting and increased scale to mitigate both the current headwinds and the inevitable painful changes that lie ahead.”
And sure enough, Discovery’s David Zaslav touted cost savings of $350 million to The Times, and noted that Discovery could expand Scripps’ reach to 220 countries and create new services for mobile and streaming. As Zaslav told the Times: ”It is a renaissance moment for content and a great opportunity for the content business. The question is, what content is going to travel?”
That really is the question. It also remains to be seen whether food and travel channels can succesfully make the leap to the many streaming services, or make a stand with their own service. Given that Nielsen is now adding Hulu Live TV and YouTube TV to its TV ratings, the shift to streaming — and ad spending on these digital TV platforms — seems destined to only accelerate.
Now consumers will make the final decision on whether they want to fork over a few bucks for some morsels of content, or whether all these skinny bundles will add up to just another kind of bloated menu.
Signal Media co-founders: Miguel Martinez and David Benigson
In December, Hearst Ventures participated in the Series A round of funding for Signal Media, an artificial intelligence-powered information company that helps its clients monitor the world’s news media. Signal CEO David Benigson offers insights into the platform’s technology, which is designed to help businesses make smarter and faster decisions.
How does Signal track and monitor news cycles across global markets?
David Benigson: Signal is an artificial intelligence company with the goal of transforming the world’s news into accessible, actionable bits of knowledge. We apply cutting-edge technology that we have developed here, in house, to enable clients to monitor the news for whatever they deem important: company mentions, client news, trending storylines and more. Our motoring tool analyzes news in real time across over 100 markets and 40 different languages. We are trying to bring clarity to the news and get users the information they need to know, along with information they didn’t even know they needed.
What types of clients does Signal serve?
Benigson: We have found success with clients across a range of fields—from big financial institutions to communications firms. One of our initial areas of focus was transforming the way public relations departments work and receive coverage concerning their brands. Increasingly, we are seeing the value of our service diversify into areas that are beyond the scope of our initial plans, including client intelligence, horizon scanning, and regulatory change.
Ultimately, we enable our users to search for companies, topics and themes of interest. This provides them with the ability to track their reputation, understand wider market insights and operate more effectively across the board.
How do you see clients most effectively using Signal on a daily basis?
Benigson: Let’s take a big wealth management firm as an example: Previously, they were only able to track mentions of themselves in the news. Today, they are able to not only monitor each of the subdivisions of their very large company, but also monitor their competition, key spokespeople, clients and key trending topics that impact the regulation of their business. And they are able to do all of this within our single platform.
What we have been able to do is allow our clients to have specific and narrow searches which provide only relevant information. Our search results give a holistic view of the interests of the company and the sphere in which they are operating. Additionally, users are getting this information in real time and from all across the globe.
Can you share some details about the experiences that led you to create Signal?
Benigson: Initially,I studied law and then worked with a few startups. After that, I worked with chef Jamie Oliver, who himself created a media company. I founded Signal when I was 24 years old, so I had very little direct managing experience. The process of launching a company has been both amazing and challenging. I’ve learned so much over the past three and half years as the company has scaled up.
The original idea for Signal came from speaking with people in the industry about how they were receiving news every day and what tools they were using to obtain that information. It rapidly became clear that there was a big gap in the market for a tool that could more effectively help people make sense of the vast and ever-growing web of information available online.
What makes Signal different from the other services that are offered in this field?
Benigson: It really starts with our artificial intelligence technology. Signal is looking to automate things that have, up until now, been done manually. Artificial intelligence means that, in a sense, we can be uniquely ambitious. There are millions and millions of new documents added to the internet each day, and processing that data and connecting that information to users in real time is only possible because of our powerful, intelligent technology.
On top of that, our user experience and customer service is a real draw. We have spent a lot of time thinking about what happens when a client is trying to work with Signal, and we want to make that process as frictionless as possible. Our strength is that we are able to combine the power of our technology with the human experience of using our platform. Because of that, our product delivers an unparalleled experience that sets us apart from the competition.
Benigson: We have gone through quite seismic changes since developing the initial concept, and we are now servicing around 100 corporate clients. Signal has concentrated on adding value to our users by identifying what they continue to struggle with when it comes to monitoring their brands. We want to provide end-to-end solutions, so we continue to seek user feedback. Signal has employed user-centric design processes that ensure we have regular interactions with our clients—this all feeds directly into the product development process.
Who makes up the Signal team?
Benigson: Our team has grown to around 50 people. Two years ago there were only 10 of us, so we are expanding rather quickly. Half of the team is made up of product developers, tech engineers and data scientists, and the other half is made up of sales, marketing and client relations employees. Our latest round of fundraising will allow us to invest in both of these key areas at a larger scale.
How are you working to secure more clients based outside of the U.K.?
Benigson: Signal has a small operation already running in New York, but we want to continue scaling that up. We see the U.S. as being the largest and most attractive market for us, and we are extremely keen to make that work. We are always working with our sales and marketing teams to improve how we reach people outside of our current core areas.
What’s next for Signal in 2017?
Benigson: We are continuing to expand the data sets that we use, including in the legislative and research fields. The broader the selection of data we aggregate, the more we are able to apply our products to people in large organizations. We are also looking to launch new products on top of our core platform. Right now, we are gearing up to launch a specific product that allows our clients to track changes in regulation as they happen, helping them to remain compliant. We also have a mobile app that we are preparing to launch, as well as a few new tools within the platform itself.
From the Signal perspective, what are some of the biggest benefits to your partnership with Hearst?
Benigson: A big part of Signal’s platform is how we leverage news media, and there is no better organization at the edge of innovation in news distribution than Hearst. They have offered unparalleled strategic advice when it comes to our expansion and how to leverage technology to get the most value. I also think that when looking at U.S. expansion, Hearst will be a key player in helping us build a network. We are really excited for the opportunity to work with, and learn from, the Hearst Ventures team.
The rumors were true, and Yahoo, one of the pioneers of the web, is now part of Verizon, the largest wireless carrier in the U.S., after an all-cash deal of $4.83 billion.
It’s a small sum for one of the most popular websites, which was worth more than $125 billion at its zenith in 2000. Many are dissecting Yahoo’s downfall, which likely stemmed from an ongoing struggle with its focus: Amazon owns shopping, Google owns search, Apple owns mobile hardware and Facebook owns photos and the social graph, as the New York Times’ Mike Isaac outlined. Yahoo insisted on branding itself as a media company when it could have focused on building out its technology, and tried to do too many things at once. The result is that it never became known for anything in particular, and did a mediocre job at everything.
But there’s still plenty of potential upside in the acquisition for Verizon. All eyes are now on the company to see what kind of strategy it will take, and whether it can turn Yahoo’s downfall into a climb to the top for itself.
Consumer Behavior and Ad Tech Anyone who’s been paying attention knows that what Verizon was really after when purchasing Yahoo was not the brand itself. What Verizon did want was Yahoo’s 22 years’ worth of data on consumer behavior and ad technology. Verizon previously acquired AOL, another once boehmouth and now faltering web property, marking Verizon’s push into content and ad tech. Now, with the scale from the Yahoo purchase, as well as Yahoo’s “mobile applications and advertising technology for video and handheld devices,” as Bloomberg’s Brian Womack wrote, Verizon might be able to lift itself into a higher echelon on the web.
And why would it want to do this? Perhaps investing in the advanced technology of ailing web companies is a good way for Verizon to stay relevant, according to Wired’s Brian Barrett. Because Verizon is one of the largest carriers, it already saturates the market, and so growth in its traditional business is limited. Moving up in the evolving digital advertising business, though, is a way for Verizon to diversify and grow. So now Verizon — with AOL and Yahoo, both of which have sophisticated ad tech — can aim higher.
As the New York Times’ Vindu Goel and Michael de la Merced reported, “The idea is to use Yahoo’s vast array of content and its advertising technology to offer more robust services to Verizon customers and advertisers.” Verizon has the benefit of location data, although that is probably limited to Verizon users, and other Internet companies have similar data.
Taking on Facebook and Google And let’s be clear: The duopoly currently at the top of digital advertising are Google and Facebook, both of which posses a staggering amount of data from users. They’re certified Internet behemoths. The two companies together took in 55% of the digital ad market last year, according to eMarketer. A combined Verizon and Yahoo, meanwhile, would take in six percent of the digital ad market. Verizon may have climbed a few steps on the ladder with the acquisition, but Google and Facebook are already in the clouds as Verizon finds its footing.
Does that mean Verizon should back down in digital advertising, and succumb to the fact it’ll probably never reach Google-Facebook levels? Yes and no. Trying is the only way it will continue to make a dent in the industry, especially as people spend more time on their phones. So investing in ad tech and mobile video, like Verizon’s video service go90, is a smart decision. Because “ultimately, AOL’s ad-sales technology could encourage brands to spend more money across a range of Yahoo websites and apps,” as the AP’s Tali Arbel wrote.
But Verizon will have to keep its expectations realistic. That goes not just for competing with Facebook and Google, but also for ensuring its targeting doesn’t amount to a privacy breach. It already got in trouble with the FCC in March for enabling a “supercookie.” Now, as the AP’s Arbel reported, “the FCC wants broadband providers like Verizon to seek a customer’s permission in most cases before sharing data with advertisers.” That’s not something that tech titans Google and Facebook will have to deal with because their Internet access plans are still nascent.
Bottom line: Verizon is now a serious player in ad tech and online content, with even more consumer data—but it has a long way to catch the leaders.
Something about AOL and buyouts always brings a strange sense of déjà vu. It takes us back to the glory days of the first dot-com era when then-upstart AOL bought media giant Time Warner for $164 billion in 2000. Fast-forward 15 years, and the shape of AOL’s identity is much more about ad technology—and popular content with Huffington Post, TechCrunch and Engadget—than it is about dial-up Internet (though it still has 2.2 million of those subscribers too).
Last week, Verizon announced its plans to purchase AOL for $50 a share, in what amounts to a $4.4 billion deal. Some observers have noted that these numbers are pretty small for a company like Verizon, and that AOL continues to remain a major player online, especially when it comes to the future of online advertising: mobile and video. In fact, these are attributes Verizon is banking on to help it grow in mobile and video advertising as it builds its own mobile content collection as well.
What AOL stands to gain, however, may necessitate some soul-searching on its identity—or rather, how other parties view its services, and what those services have come to mean in our modern media environment. AOL owns several global brands such as Huffington Post, TechCrunch and AOL.com. Just like media giants Facebook and Google, it’s in the business of helping brands use sophisticated technology for online advertising. It’s also invested heavily in online video.
Spinning Off Content? But will Verizon want to keep those content sites that have in the past been critical of the cell giant? The big rumor is that AOL has been in what Re/code calls “advanced discussions with a number of parties” to spin off the Huffington Post brand. It would bring in more money for Huffington Post, which has been expensive for AOL to maintain and monetize, especially against feisty competitors such as BuzzFeed and Business Insider.
According to Re/code’s Kara Swisher, the most serious talks were with German media company Axel Springer, as well as private equity firms. Her sources put a price tag of $1 billion on the Huffington Post group, but she couldn’t get a public confirmation of talks from CEO Tim Armstrong or others at AOL. “Sources said Verizon was far more focused on advertising tech and video and that some kind of spinoff or joint venture was far more likely for the Huffington Post,” Swisher wrote.
Ad Tech the Golden Goose Indeed, AOL’s advertising business is showing positive signs: It’s reported a seven percent growth rate in this year’s first quarter, and as Trefis, a company which analyzes stock prices, noted, much of this growth came from its programmatic platform across the third-party advertising network. Trefis also estimated that third party display advertising made up nearly half—42.2%—of AOL’s value.
All of that is very good for Verizon, especially if it wants to take on giants such as Facebook and Google and plant its footprint more heavily in mobile advertising. As Farhad Manjoo wrote in his column for the New York Times, together those two online behemoths “control more than 55% of the $42.6 billion worldwide mobile ad market, according to eMarketer.”
All of that is very good for AOL as well. AOL honcho Armstrong said in a memo to employees after the acquisition announcement, “If there is one key to our journey to building the largest digital media platform in the world, it is mobile.” And Armstrong deserves all the credit in the world for turning around an online has-been into a digital powerhouse commanding a premium payoff.
So should AOL now be known for its brand, or for its platform? Another lingering question is what mobile advertising itself should mean now. Ads on a mobile device mustn’t just try to get a person to buy something; they must also utilize data and key information about that person to create a custom advertisement for that specific individual. As Manjoo put it, “People in the ad-tech industry said that in buying AOL, Verizon’s immediate goal may be to marry its data about customers to AOL’s capacity to serve ads to increase this sort of relevancy.” And data mining is what Facebook and Google already do so well.
Ultimately, this deal might be less about the booming AOL content business and a lot more about ways to serve mobile and programmatic ads into a lot more content.
Forbes Media has announced the acquisition of the private photo sharing app Camerama. Financial terms of the deal were not disclosed. Effective immediately, the founder of Camerama Salah Akram Zalatimo will join the company as VP of Mobile Products, reporting to Forbes Media Chief Product Officer Lewis D’Vorkin. According to D’Vorkin the move does not signify an interest by Forbes to be in the photo sharing app business. Rather, Zalatimo will assume the responsibility of building on Forbes’ mobile strategy by developing a platform of apps for the company that leverages their core technology and feature set—such as profiling, notification, and sharing–which served as the foundation of Camerama.
According to D’Vorkin, “We have a vision for a platform of niche, or vertical, social apps where we build an experience around passionate members of communities, which is very different from a strategy to develop just another distribution channel for what we already have.” That strategy, says D’Vorkin includes creating an opportunity for like-minded groups of professionals to “discover each other, communicate, and be part of each other’s professional lives under the Forbes umbrella.”
He and Zalatimo discovered that they were like minded when they met socially last year and found that they were interested in each other’s businesses and in exploring the possibility of working on the future of mobile together. D’Vorkin points out that, given its DNA, Forbes is always interested in those with entrepreneurial vision and he admires both Zalatimo’s technological acumen, but also his business savvy and background, which includes stints at McKinsey & Company, Sony Music Entertainment and Bain.
That business savvy will come into play as he develops the Forbes mobile strategy D’Vorkin alluded to. “Advertisers like scale and reach,” he says. “They also like to reach targeted audiences.” With this acquisition, and with the addition of Zalatimo to the Forbes team, D’Vorkin sees a future that will allow his company “the ability to provide scale as well as targeted audiences in a social app setting.”
With its acquisition of AnandTech, Purch continues to put its money where its mission is. Since it rebranded from TechMedia to Purch last April, the company has steadily continued to build up the ways in which it can “ease complex buying decisions for shoppers.” Fitting neatly into the buying funnel, AnandTech further enhances the reviews component of the ever-growing Purch stable of sites, joining its Top 10 Reviews, the Tom’s brand of tech media sites (purchased last year) and BuyerZone (purchased in June).
Anandtech.com is known for its computing and IT analysis and reviews, with an emphasis on mobile, which the company feels will round out Tom’s Hardware coverage. “AnandTech will be complementary, more than competitive, to Tom’s” says Purch COO, Doug Llewellyn. “The world is going more mobile. These guys got there early and do it better than anyone else.”
However he emphasizes the importance of what the two brands have in common: loyal, engaged audiences of tech enthusiasts. “With acquisitions, we always look at the user community and the people driving that community,” according to Llewellyn, pointing out that Purch focuses on the connection of content, community and commerce. He also says that the feeling across Purch is one of admiration and respect for AnandTech’s rigorous reviews process as well as its writers and editorial team, who will be staying on as part of the acquisition.
AnandTech Editor-in-Chief Ryan Smith–who took the role after the site’s founder Anand Lal Shimpi’s retired from journalism to join Apple in August–wrote a lengthy post about the search for a buyer. In it, he says Shimpi spent almost a year meeting with potential buyers to find one that had a sustainable business model (particularly given that AnandTech has been profitable since inception) and could improve the site’s reach. They also sought a buyer that had values that aligned with theirs. Smith found the process hearting, noting recent investments from traditional and new media, as well as VCs in the business of creating high quality content.
Smith writes that, “In meeting with the Purch business and editorial teams, there was a clear interest in further developing AnandTech’s strengths as well as feeding back AnandTech’s learnings into the rest of the Purch family.” Llewellyn echoes this, pointing out that through the Tom’s acquisition, “we learned a ton from how they do things and you can see the effect across our entire portfolio.” He feels confident that Purch “can bring enormous expertise on how to scale a brand, given that Tom’s was a third, or maybe only a quarter the size it is today when we acquired them last year.”
And scale, as well as advertising sales and marketing acumen are things that Smith clearly looks forward to increasing under Purch: “While we had no issues competing with larger corporate owned sites on the content front, when it came to advertising we were at a disadvantage…larger corporate owned sites could show up with a network of traffic, substantially larger than what AnandTech could deliver, and land more lucrative advertising deals than we were able to.”
Given that Purch boasts the number one position in ComScore’s Tech-News category, a global readership of more than 100 million monthly unique visitors, and the ability to drive more than a billion dollars in commerce transactions every year, increasing scale for the AnandTech brand should not be a problem. “We are really attuned to how marketers want to reach and speak to readers,” says Llewellyn. “But as we tie this great brand to the portfolio of brands under Purch, we definitely want to be sure that the readers know are excited to support the best of breed content that AnandTech is known for.”
