M&A in the media and entertainment

The creative industries have long extended their tentacles in new places with the support of technology – for example, artistic photography, music has been recorded and the actors have passed from one scene to another. In the past 15 years, however, technology has extended its own tentacles in the media – for example, the massive digital distributor of Netflix has grown up a studio to complete its library, and the Amazon retail center has grown Video content as an edulcoating.

Big Tech’s push in the media and games led traditional media companies to react to clearly different stages. First of all, they turned to mergers and acquisitions to consolidate and build a scale in their core business. It was a way for media societies to compete with their technological brothers. Now they add another approach – they use reach offers to develop between the sectors. It is to the point where more than half of all mergers and acquisitions of the media industry involve either a target or a buyer outside the industry (see Figures 1 and 2).

These companies mainly converge to compete with technological media platforms; They also acquire to gain more intellectual property with persistent leaves that can be used between the methods. By having these transversal assets and IP, they create communities of fans and multimodal content – and they generate income not only from subscriptions, streaming advertisements or theater tickets, but also by other means, such as goods and special events.

Disney, a media company with a rich history of enlargement both on a scale and to reach agreements, has also moved more energy from the scale in recent years. Although it is not a linear path, Disney has gone from a majority of transactions on a scale, such as Pixar in 2006 and 21st Century Fox in 2019, to an increasing accent on reach agreements. In 2024, the emblematic company added offers outside its heart to its mergers and acquisition strategy by investing in Epic Games, manufacturer of the immersive game successful Fortnite.

Another recent agreement in the transformer sector involved the purchase of Alamo Drafthouse by Sony Pictures Entertainment, a theater channel known to have served dinner and drinks during films. Alamo will be managed under a new division called Sony Pictures Experiences, expanding the presence of Sony in new parts of the media value chain.

And now let’s talk about content. Over the decades, the content remained king. Consumers can fragment on platforms, but a quality IP that can prosper in the proliferation of places to find that it remains the constant in this world of convergent platforms. This is why companies make offers for persistent leaves that can be exploited through new terms.

Examples of IP -based acquisitions abound in all sectors. Sony Music bought half of Michael Jackson’s published publication and music catalog, depending on the lasting nature of his music in the digital future. Avatar’s concert producer, Pophouse Entertainment, bought the Kiss catalog as well as the resemblances of group members, banks not only on positive growth trends around their multiplatform music and viability catalog, but also a Virtual live entertainment future. Investment capital funds have invested in smaller production studios with quality IP history. For example, Redbird bought All3media, looking for a lasting advantage in the video space.

What does this mean for media and entertainment companies that shape their mergers and acquisitions strategy? First of all, as our giant technology friends grow, convergence will continue to grow with them. For example, while advertisers are looking for new sources of income in a more fragmented consumer market, more media and entertainment companies will examine transversal transactions to access the retail sub-sectors. At the same time, the value of the IP which can bring users to a platform will continue to hold and grow. It also means more offers for IP.

Buyers in the transversal media M & A quickly learn that these transactions require a different type of diligence. On the one hand, a buyer is probably less familiar with the target industry. In addition, the income synergies inherent in the reach agreements are more difficult to achieve and subscribe than cost synergies. To overcome the two challenges, the most selected media buyers will produce more detailed diligence than usual, using white databases and chatting with target customers to gain more confidence in the benefits of income than ‘They can draw from cross-selling and reducing unsubscribe, and the increase in fans’ engagement on the platform.

Another important factor in the effective evaluation and delivery of the value of transversal media transactions involves culture. The best buyers will recognize that there is a higher risk of cultural differences, including differences in working methods. They will find the balance between the harmonization of these non -negotiable cultural differences while ensuring that they preserve the unique and precious cultural assets of different companies.

Finally, the successful delivery of a convergence strategy means recognizing the need for more interfunctional work in the combined company. This is why the best media buyers create an operating model that integrates the right forums or mechanisms to encourage and ensure interfunctional work.