Media Money with Julia Boorstin

Media M&A on the Rise

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Get ready for a busy year of media mergers and acquisition activity – that’s the headline from PwC’s Entertainment and Media Report.

There are a slew of cash rich buyers—media conglomerates, tech giants, and Private Equity players with new capital. And new technology is creating new digital revenue – and new value for content companies.

The blurring of the line between media and technology means we’ll see more deals between the two sectors. And the fact that Facebook is expected to IPO means it’ll have more cash for acquisitions.

Deal Pick Up

PwC predicts a pick-up in mergers and acquisition value and volume this year. In 2011 media and entertainment deal value increased to $52 billion from $27 billion in 2010. But once value related to the Comcast-NBC Universal(*Note: Comcast is the parent company of CNBC) deal is stripped out, deal value was pretty much flat from 2010 to 2011. Deal volume decreased 14 percent to 801 deals while the average deal value grew 25 percent to $160 million last year.

Digital Distribution Drives New Value

Look to content creators cash in on the new value of their content, now that they’re generating incremental revenue from digital distribution. PwC says production companies with proven franchises and the ability to turn out quality programming will have higher valuations. On the flip side, traditional distributors like TV networks and cable providers will have to compete with a broader array of rivals to control the entertainment pipe into consumers’ homes. The report points out that Apple , Google and Netflix are non-traditional buyers for everything from original series like “House of Cards” on Netflix or YouTube’s channels.

Legalization of Online Gaming Could Drive New Business

PwC looks to the legalization of online gambling to drive new partnerships and revenues – both for traditional casino operators and social media and gaming companies—like Facebook and Zynga. Though there are a slew of hurdles before this becomes a reality, and it’s a state-by-state issue, the potential is huge. US consumers comprise more than half of the world’s poker market.

Other areas to watch: Video games—traditional, social, and casual—and cable TV, both in the US and abroad.

Questions?  Comments?