The wave of content consolidation turned into a tsunami in May as US media companies sought to better position themselves in the global streaming war.
S&P Global Market Intelligence counted 104 sector deal announcements with disclosed transaction values in May, up from 106 in April. By comparison, the industry saw 68 announcements in May 2020, when trading activity came to a standstill during the pandemic.
Discovery Inc.’s proposed deal to merge its non-fiction and international entertainment and sports businesses with the entertainment, sports and information businesses of Warner Media LLC marked the largest industry deal announced in May. AT&T Inc., the parent company of Warner Media, will receive $ 43 billion in cash, debt and other consideration as part of the deal, which is expected to close in mid-2022.
President and CEO of Discovery, David Zaslav anticipates key strengths brought together by the merger to propel the unified business to the next level of streaming video providers like Netflix Inc. and Disney +. Zaslav is waiting Discovery to attract up to 400 million global subscribers direct to consumers through the combination, although it did not give a timeline.
Additionally, AT&T CEO John Stankey said he sees the potential for the offering to expand further with different types of content, including music and games.
Goldman Sachs & Co. LLC and LionTree Advisors LLC were AT & T’s financial advisers, while those for discovery include Allen & Co. LLC, JP Morgan Securities LLC, Perella Weinberg Partners LP and RBC Capital Markets LLC. Neither company disclosed financial advisory fees, but for comparison Allen & Co. and another advisor each charged $ 50.0 million for advisory fees and $ 5.0 million. for a fairness opinion when they advised Time Warner on its 2018 sale to AT&T.
The second biggest deal was Amazon.com Inc.’s planned $ 10.56 billion purchase of MGM Holdings Inc. This move will give the e-commerce, cloud and streaming conglomerate a substantial catalog of content to fight its streaming rivals The Walt AT&T Disney Co., Netflix and HBO Max.
Retail analysts including Dan Romanoff of Morningstar and Tuna Amobi of CFRA Research expect the deal to be part of Amazon’s bigger push to buy other movie studios to strengthen more its streaming library. However, Kagan analyst Wade Holden pointed out that many regulators are not very happy with the consolidation among tech conglomerates and that lawmakers are proposing bills that would hamper their conclusion of deals. Kagan is a media research group within S&P Global Market Intelligence.
While Amazon’s financial advisors have remained anonymous, MGM has received financial advisory services from LionTree Advisors and Morgan Stanley. The fees of none of the advisers were disclosed.
Gray Television Inc.’s $ 4.05 billion deal to buy local media group television channels from Meredith Corp. in cash after Meredith redistributed its National Media Group Inc. to shareholders was number 3 on the list.
Meredith expects to become a consumer-focused lifestyle media company as a result of the transaction, which is expected to close in the fourth quarter. In June, Meredith accepted a revised proposal from Gray Television that will allow Meredith shareholders to receive $ 16.99 per share, up from $ 14.51 per share previously, and a 1-to-1 share after the transaction closes.
Wells Fargo Securities LLC was the sole financial advisor to Gray Television, while Meredith was advised by BDT & Co. LLC, Lazard Ltd. and Moelis & Co. LLC. The companies did not disclose the advisory fees.