The timing for “M&A in Media & Entertainment,” a panel presented by Intralinks on June 13 in the landmark CBS Radio Building in L.A., could not have been more perfect.
Twenty-four hours prior, Judge Richard Leon approved AT&T’s blockbuster $85 billion acquisition of Time Warner, a vertical merger that will reshape the media industry. The U.S. Justice Department sued last year to block the deal, contending that it would limit competition and raise costs.
Earlier in the day Comcast made an unsolicited $65 billion offer for 21st Century Fox, setting the stage for a battle with Disney.
Moderated by Chris Palmeri, Los Angeles bureau chief at Bloomberg, the discussion included four high-power entertainment execs – Palash Ahmed, vice president corporate development at Sony Pictures Entertainment; Steve Lescroart, head of finance & strategy at Platform One Media; DJ Jacobs, CFO & head of business development at MRC Studios; and Sonya Joo, vice president strategy and business development at 21st Century Fox – all of whom are intimate with mergers and acquisitions.
Sonya Joo began by relating anecdotes about several strategic investments her company has made to remain competitive in the marketplace.
“We recently started a corporate venture investing program. We identified different areas that we want to get closer to – everything from direct-to-consumer plays to audience intelligence to advance production techniques or new story formats,” explained Joo. In the past year 21st Century Fox have invested in social-ticketing service Atom, Italian OTT platform Chili and an independent comic publisher Boom! Studios.
“We’re trying to tap into an ecosystem of start-up companies where innovation and ideas are happening through operating relationships, pilots and investment. It’s one of the prongs through which we’re trying to supercharge and re-invigorate our business model and make our content relevant to all audiences.”
Palash Ahmed provided insight into Sony Pictures Entertainment’s strategic view of M&A: “We look at traditional investments that can add scale to help us compete better in the market. We look at early-stage companies as well but it has to have a strategic angle, helping our motion picture group or television business, maybe a future customer, supplier, or if our association can help grow a new segment.”
DJ Jacobs discussed the strategy behind the formation of Valence Media, a merger completed in January which combines the Billboard-Hollywood Reporter Media Group, dick clark productions and film and television studio MRC.
“By bringing these companies together and building in support, we’re finding many ways to collaborate and expand the scope of our platform,” Jacobs said. “Everyone across the combined company has a lot of ambition to grow. We look across the market and realize that we’re not going to simply grow to the scale of the traditional studios or a huge technology company by buying our way there or just ramping up production. By building a really well-run platform, with additional investments and M&A to continually expand that scope in a really thoughtful way, we can enhance strategic position and build scale over time.”
Steve Lescroart, of Platform One Media, a new endeavor backed by private equity firm TPG Growth and cable giant Liberty Global, looked at M&A through a global lens.
“I think what you see now are smaller, more strategic investments from [Chinese] companies that operate in the space, from [Chinese] companies that have more global operations and more cash offshore in Hong Kong, New York or elsewhere,” he said. “There’s still quite a bit of activity – it’s just changed. I don’t think you’ll have a major Chinese company stepping up alongside Comcast and Disney to try to buy Fox. It’s a completely different scope of investment activity that exists today relative to a few years ago.”
Toward the end of the discussion panelists were asked to make M&A predictions for the second half of 2018. When the conversation touched on Sony, Palash pointed out that Sony has a diverse portfolio of entertainment assets consisting of music, publishing, film, TV, gaming and hardware; fundamental elements that can help us compete against tech giants. Palash also acknowledged that like other studios, the company is approaching a crossroads, “Either we buy or get bought.”