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. M&A activity is on the increase with deal values predicted to reach €20bn with 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 €100m level and deal numbers hit the 50 mark. Last year saw transaction value increase from €11.5bn in 2002 to €16.8bn and deal volumes grew from 78 to 85.

Media mega deals made a comeback in the second half of the year. Of the ten transactions valued at over €500m during 2003, six were completed in the last six months of the year. The second half also accounted for the only three €1bn-plus mega deals. These included CVC, Permira, BC Partners and Investitori Associati taking control of Italy’s yellow pages business Seat Pagine Gialle for €3.7bn. The other two deals, both with a value of €1.1bn 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.

Oliver Wolf, UK entertainment and media leader, PricewaterhouseCoopers Corporate Finance, said: “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.”