Media Sector Attracts Funds –

Confidence in the European media sector looks set to continue in 2004, according to the latest Media Insights report from PricewaterhouseCoopers Corporate Finance. Additionally, M&A activity is increasing with deal values predicted to reach EURO20 billion with the number of transactions exceeding the 100 mark.

The outlook follows an improved performance in 2003, particularly in the second half of the year when deal values exceeded the EURO100 million level and deal numbers hit the 50 mark. Last year saw transaction value increase from EURO11.5 billion in 2002 to EURO16.8 billion and deal volumes grew from 78 to 85.

Mega deals made a comeback in the second half of the year. Of the 10 transactions valued at more than EURO500 million during 2003, six were completed in the last six months of the year. The second half also accounted for the only three EURO1 billion-plus mega deals. These included CVC, Permira, BC Partners and Investitori Associati taking control of Italy’s yellow pages business, Seat Pagine Gialle for EURO3.7 billion. The other two deals, both with a value of EURO1.1 billion were Bertelsmann-Springer backed by Cinven and Candover and the sale of Spanish digital TV station, Via Digital to Sogecable.

Private equity houses have played an increasingly active role in European media consolidation and were involved in 23 transactions last year, which represented over 25% of all European media M&A deals in 2003. However, the size of the deals meant this actually represented 57% of the total deal value.

“Private equity houses were attracted by the strong cash generation qualities of media companies and the fragmentation of the sector, a pressing need to invest capital and a lack of competition from financially-constrained trade buyers,” said Oliver Wolf, a U.K. entertainment and media analyst for PricewaterhouseCoopers Corporate Finance.