As the media industry crawls out from under the worst of the global pandemic — and braces for more variant-induced unpredictability — the sector looks ripe for the picking from a buyer’s perspective.
They’re not the only potential acquirers. While the strategic behemoths Disney, Discovery, and Comcast are thinking of shedding non-core assets, they’re keeping a watchful eye on who might come up for sale.
Elsewhere, digital-media companies are looking to the performance of BuzzFeed and Group Nine on the public markets as they plot their next moves. And companies outside of the media sector — from payments giants to ecommerce platforms — are also looking for more content.
Insider spoke with 10 media experts including media executives, analysts, consultants, and bankers who identified the biggest deals they think are likely to take place in 2022. The following list is speculative and not all of these companies are actively discussing deals.
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Speaking at a conference in September, Comcast’s chief financial officer Michael Cavanagh said said the bar was high to pursue acquisitions of a material size, but that the company was open to smaller ones.
Next to giants like Disney and the soon-to-be-combined Discovery-WarnerMedia, Brian Roberts’ Comcast is starting to look small. NBCUniversal’s studios and networks don’t have the scale of these juggernauts, which have loaded up on library assets through mergers and acquisitions.
NBCUniversal could go after Disney and Hearst’s A&E or AMC, but the owner of cable destinations Bravo, E!, and USA could face the regulators if it goes after more.
Comcast could build on the international expansion it started in 2018 with the acquisition of European pay-TV broadcaster Sky. Telecoms in emerging markets like India or in other parts of Europe could also be attractive targets.
Or, it could expand its US content business. The most buzzed-about scenario is a merger with Shari Redstone’s ViacomCBS. Numerous outlets reported earlier this year that the two companies held talks about how to work more closely together. A combination would unite the Paramount and Universal studios, cable networks including Bravo and Nickelodeon, and streaming services Peacock and Paramount+ — though the companies might have to shed some of their broadcast and sports assets for the deal to pass regulatory muster.
“On a standalone basis, neither Paramount+ nor Peacock will get to a scale where they can go and compete head on against these giants,” said Shahid Khan, partner at Arthur D. Little. “It’s a game of consolidation.”
Mark Mainz/Netflix
Streamers got serious about M&A in 2021.
Amazon acquired MGM. Roku bought the Quibi library and the company behind “This Old House.” And Netflix, which had sparingly visited the M&A well, bought video-game developer Night School, the Scanline VFX company, and the Roald Dahl Story Company that manages the rights to the British author’s works.
“There’s no question that the streamers are in the front of the queue right now,” Bill Simon, who leads the media and entertainment division at Korn Ferry said. “The streamers continue to be the focal point of the media and entertainment content consumption space.”
Netflix and its rivals will likely think more internationally when it comes to dealmaking, industry sources said. The global streamers are grappling with regulations across the European Union and elsewhere that require them to invest in local content. And, with competition for local-language content heating up globally, they’re looking to strengthen their pipelines in local markets. Independent studios and platforms with significant IP could all be targets.
Sebastian Blum, who leads the media, entertainment, and consumer internet division at OC&C Strategy Consultants, said media companies are making assumptions about the post-pandemic world, and the reality will massively impact dealmaking.
For instance, streamers from Netflix to Disney+ saw huge spikes in subscribers and viewership during the pandemic that have since dropped off. The level at which growth settles over the next year will impact how motivated these companies are to buy, and what they shop for.
“That post-COVID reality, which is really murky right now, will become more prevalent and obvious over the next year,” Blum said. “We might be in for some surprises.”
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AMC Networks, the cable programming venture controlled by James Dolan, could come up for sale in 2022, according to multiple insiders. It’s under the fresh management watch of former Showtime top dog, Matt Blank, who’s likely to broaden the scope of the venture’s streaming initiatives.
Other cable assets that could become targets for private equity buyers in 2022 are A&E, Starz, and Showtime, if spun out of ViacomCBS.
“Private equity is going to be a big player in acquiring these underperforming media assets, or sub-scale media assets,” Khan at Arthur D. Little said.
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Buoyed by Blackstone, the acquisitive trend setters Kevin Mayer and Tom Staggs made a play for a host of celebrity-led producers including Reese Witherspoon and Will Smith in 2021. But they’re not the only ones riding this rodeo. RedBird Capital snapped up a stake in LeBron James’ SpringHill Company and Korean firm CJ ENM bought Endeavour Content.
Davis Noell, a senior managing director at Providence Equity, predicted more premium content deals in 2022. “Consumption of film and TV is ubiquitous. There’s a war for premium content that’s taking place,” he said.
Acquisition targets could include Brian Grazer’s Imagine Entertainment and other star-fueled vehicles, including those operated by comedian Kevin Hart and actress Gwyneth Paltrow. Solo entrepreneur Peter Chernin has signaled he’s in the market to sell. As for buyers, companies including All3Media and Fremantle have been snapping up production houses abroad.
Separately, Lionsgate has long been the target of M&A fever. In November, the Mark Rachesky-backed company said it was considering a sale or spin of pay-TV unit Starz.
And Roku could be lunch for a bigger fish as well as an acquirer itself as it tries to do battle with the bigger streamers.
International players in regions including the Middle East are also eyeing opportunities in the US. In recent years, the Qatar-owned group BeIN Media bought a majority stake in US studio Miramax, and independent US studio STX Entertainment sold to Indian movie producer Eros International. STX, however, is for sale again as the merger struggled amid the pandemic.
The pandemic has supercharged e-commerce, turning social media and much of digital entertainment into an always-open shopping destination.
Financial firms are also leaning into content and other perks to retain customers. That seems to be what’s driving deals such as JPMorgan’s acquisition of restaurant-reviews site The Infatuation. Side benefit: Having content lets companies influence Google’s algorithms without increasingly costly paid ads.
“Think Paypal trying to buy Pinterest,” said Nathan Richardson, partner at Joffre Capital, a buy-out fund with $1 billion under management. “These media platforms are being purchased by companies that rely on transactions, be it brokerage, banking, commerce, gaming, etcetera. The scale of top-of-the-funnel media businesses and the opportunity to own your own funnel fundamentally reduces your increasingly expensive cost of customer acquisition off platform.”
Potential acquisitions to watch: Streetwear site Highsnobiety, which hired LionTree to weigh a sale; and Pinterest, which was rumored to be pursued by PayPal and could be a target of others.
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At least one source believes that the Murdoch-controlled Fox or News Corp. could pursue Viacom’s multi-billion dollar book publishing unit Simon & Schuster now that the DOJ has said it will sue to block a $2.2 billion bid by Germany’s Bertelsmann, owner of Penguin Random House.
News Corp. already owns HarperCollins, one of the big five English-language publishers in the world. It’s hard to imagine the Biden administration’s Justice Department looking favorably on a potential Murdoch bid, however.
The Carlyle Group
The private equity powerhouses hunting for deals include Carlyle. The firm is armed with a $43 billion investing strategy which includes tech, media and telecommunications targets.
Carlyle’s Jay Sammons, head of global consumer, media and retail, told Insider that over $100 billion will be spent on content this year and that streamers will have to complement their programming with outside partners. “Which is why we’re seeing high-quality, third-party franchises being leveraged to drive subscriber growth.”
Apollo Global Management, having acquired Verizon Media in 2021, also looks set to spin the deal wheel in the coming months, according to comments its executives have made lately. Other private equity plays could run as big as the global telecoms ventures like Telecom Italia that’s currently being circled by KKR down to the smallest production companies feeding the streamers. Sports betting continues to be a growth area that’s feeding investor interest.
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US sports betting companies are also sizing up media firms for acquisitions or other tie-ups as they look to grow and manage mounting marketing costs.
DraftKings snapped up last year sports-gambling network VSIN for its production capabilities. And The Information reported that DraftKings was among the bidders to acquire The Athletic, citing people familiar with the situation.
DraftKings business chief Ezra Kurcharz told Insider in November he wouldn’t rule out other deals in media or any sector as the company seeks to increase reach and audience.
Its competitors, including casino companies and European gambling operators, could be thinking the same.
At least one sports network is shopping for a betting partner to license its brand to. The Wall Street Journal reported that Disney’s ESPN is seeking a multi-year deal worth $3 billion.
2022 may also usher in a new era for industry leader FanDuel. Its European parent Flutter has talked about taking FanDuel public in the US. And Fox has an option to take a stake in the FanDuel Group that includes the Fox Bet and PokerStars US assets, though the Murdoch-owned media company has been in arbitration with Flutter over the price. FanDuel also had talks with The Athletic but decided not to bid, according to The Information.
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As the industry further consolidates, media sources are wondering what will happen to niche players that appear to be eyeing their next steps.
Take The Information, the paid-subscription tech site founded by former Wall Street Journal journalist Jessica Lessin. Lessin recently told The Financial Times that The Information had 225,000 “active users,” a newly created metric that fused free newsletter subscribers with paid subscribers. While it’s unclear how robust the paid figure is, Lessin said that The Information is profitable, and it’s also getting more into culture and lifestyle coverage through a new weekend section.
Lessin launched the company on her own dime, but media sources have been wondering whether The Information might slot in nicely with another larger media company.
Other niche players on the minds of investors: Skift, the travel industry publisher, and Digital Trends, the Portland-based tech review and how-to site.
Skift CEO Rafat Ali told Insider that his company was on the hunt for deals itself. “We have bought three companies in [the] last three years and [are] planning at least one or maybe two more acquisitions in 2022,” he said.
The Athletic
Some digital publishers have been shopping themselves this year and those deals could materialize in 2022.
Take The Athletic, the 6-year-old subscription sports publisher. According to reports, The Athletic chatted about a deal with Axios, which was ultimately shelved, and a takeover by The New York Times, which balked at its price tag.
Bloomberg reported that The Athletic was searching for a buyer, like FanDuel or DraftKings, as sports gambling companies bet big on content. If that doesn’t work out for the money-losing Athletic, it’s unclear what happens next.
Then there’s The Skimm, once the newsletter-driven darling of the digital media world, which raised a total of $30 million from investors. As Insider reported back in 2019, the company has been searching for a buyer amid a growth slowdown. Axios reported in May that The Skimm had appointed JP Morgan as it looked to sell to a non-media company.
Elsewhere, Axios was in talks to be acquired by Axel Springer, but when that deal fell through — Springer acquired Politico instead — Axios quickly raised a round of funding in November from Cox Enterprises, valuing it at a reported $430 million.
Now the big question for Axios is what comes next. The company will likely use the fundraising to help juice its local news and paid subscription ambitions, Insider reported. But media sources are also wondering whether Axios might be fully acquired by Cox Enterprises — or look to a deal elsewhere.
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All eyes in the digital-media world are on BuzzFeed, which is set to begin publicly trading as early as December 6, according to Axios, as it combines with a special purpose acquisition company, or SPAC, and acquires style and sports publisher Complex Networks.
Indeed, BuzzFeed has made clear to potential investors that acquisitions will be part of its future strategy.
“I think there’s going to be real pressure for those guys to do M&A,” said Sean Griffey, CEO and co-founder of business-to-business publisher Industry Dive, of BuzzFeed and Group Nine Media, which also looking to SPAC.
If things go well and public investors take to BuzzFeed stock, media sources expect that Vox Media, owner of Vox, New York magazine, Eater, and Curbed, may pursue a similar SPAC path.
The Wall Street Journal reported in August that Vox Media was weighing a SPAC, a traditional IPO, or whether to seek additional funding. The Journal reported at the time that the company expected to generate about $400 million in revenue and turn a profit in 2021.
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Media sources are expecting a big year from some of the most active digital media companies in the space, like Red Ventures, the private-equity backed owner of CNET, Lonely Planet, and the Points Guy.
Barry Diller’s IAC is set to acquire Meredith’s brands, which include People, Better Homes & Gardens, and Allrecipes.
The Wall Street Journal reported that Ziff Davis, owner of Mashable and IGN, has a $1 billion war chest to go after new targets.
“I think they’re going to have a really healthy year doing acquisitions,” Industry Dive’s Griffey said of the three companies. “What they do is get the middle barbell folks and put them in a big platform.”
Another potential acquirer could be Axel Springer. The German media giant has been on a shopping spree in US digital media since acquiring Insider in 2014. Last year, Insider and Springer snapped up newsletter company Morning Brew. This year, Springer made its biggest move yet, purchasing Politico for a reported $1 billion.
Sources in the media world expect that Springer is not finished yet, and may look to bolster its digital media holdings in 2022. While that probably won’t mean an acquisition quite as large as Politico, it could see Springer go after more niche players to round out their media portfolio, those sources said.
Then there’s newcomer Recurrent Ventures, which has been one of the most active acquirers in digital media, gobbling up men’s lifestyle site MEL and car publisher Donut Media. Recurrent recently raised a fresh $75 million round of funding to fuel more media deals.