VCs dominate European media deals

Private equity firms have emerged as the most important players in the consolidation of the European media sector, according to new research.

A new report from PricewaterhouseCoopers Corporate Finance shows private equity firms playing a dominant role in the ongoing consolidation of Europe’s media industry.   

Private equity firms completed 23 deals in the sector in 2003, representing 57 percent of total deal value in European media M&A and over 25 percent of deals by number. They included the €3.7 billion ($4.75 billion) buyout of Italian yellow pages business Seat Pagine Gialle by BC Partners, CVC, Permira and Investitori Associati in what was Europe’s largest ever leveraged buyout. In another €1 billion-plus deal, Candover and Cinven acquired German publisher Bertelsmann Springer for €1.1 billion.

“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 Olivier Wolf, head of UK entertainment and media at PricewaterhouseCoopers Corporate Finance.

He added: “If the relatively high level of transaction activity seen in the second half of 2003 continues into 2004, deal numbers will reach 100 and deal values will exceed €20 billion. This means that deal volumes and values could pass levels seen in all the preceding five years bar 2000. This environment offers huge opportunities for growth driven, acquisitive companies and for those looking for exits.”

The total value of European media M&A grew from €11.5 billion in 2002 to €16.8 billion last year, with deal numbers rising from 78 to 85. The last six months of the year accounted for the only three €1 billion-plus mega-deals. Publishing was the most attractive part of the sector, boasting 38 deals worth €10 billion, ahead of broadcasting, with 37 transactions totalling €6.4 billion.