Entertainment, Media and Communications Deals Hit $74 Billion in Q2

PwC credits the rise of the megadeal

The entertainment, media and communications (EMC) sector reached $74 billion in deal volume in the second quarter, up $67 billion from the same time last year.

PwC this week released its Q2 deal insight report, which found the increase was fueled by "megadeals," or deals that are worth more than $1 billion. There were four such deals in Q1—with a total value of $75 billion—and five additional were announced last quarter.

"As we pushed through the second quarter of 2014, we continued to see EMC companies transforming themselves and shaking the foundations of their industry in the process," said Bart Spiegel, partner, Entertainment, Media & Communications Deals, PwC, in a statement. "Businesses are employing new and innovative deal structures and pursuing strategic acquisitions that leverage their core strengths yet push the envelope to capture long-term growth opportunities."

The top segments this quarter were publishing, advertising/marketing, and Internet-related services, with publishing in particular seeing a sizable jump to 42 deals, up from just 29 in Q1. PwC noted the growth was driven in large part by the acquisition of various publishing-related assets, such as newspapers, books and magazines.

"As more advertising dollars are channeled towards the Internet and mobile, those advertising and marketing companies that have established a compelling value proposition and measured success will remain attractive targets," the report stated.

Foreign and private equity investors helped spur the advertising and marketing segment to 53 deals, leading the other categories in volume. Digital and mobile ads were by far the most popular buys. One of the biggest deals of the quarter was AT&T's acquisition of DirecTV for more than $48 billion. The deal brought 26 million video subscribers under one telecom roof, and also got AT&T into the content game, with stakes in Root Sports, Game Show Network, MLB Network, NHL Network and SundanceTV.

Other telecom deals also helped shape the quarter, with Time Warner Cable/Comcast subscriptions—1.4 million from TWC and 1.6 million from Comcast—being sold to or exchanged with Charter Communications. Comcast also spun off an additional 2.8 million subscribers into a new, publicly-traded entity in which Charter will hold 33 percent ownership. The total value of the deals was $9.4 billion.

TW Telecom rounded out the top three megadeals of the quarter. Its new partnership with Level 3 is worth $7.3 billion. And the final two megadeals came from the Los Angeles Clippers (a deal worth $2 billion) and Nevada Property 1 LLC (a deal worth $1.6 billion).