Media & Entertainment 2023: The Year So Far by Imogen Carter
A lot has happened in the world over the first half of the year and so it’s a good time to look back and reflect, whilst we consider the road ahead. Interest rates have continued to rise, there was a major banking crisis in March, and geopolitical instability has affected many industries. Consumer confidence varies widely across different regions and countries. However, research reports show improved consumer confidence over the first half of 2023 in the UK and USA.
There’s been plenty to get excited about in the Media & Entertainment space. Interest from media and technology companies in sports rights continues, the Barbie movie is breaking box office records at the same time as Hollywood is facing writer and actor strikes, and despite low deal activity globally the media space has seen some big deals.
Sports
There’s lots to talk about in sports, which has been top of mind for many investors and media corporates in 2023. Despite much speculation about Disney divesting ESPN or selling a minority share in the business, the media conglomerate has just announced ESPN’s deal with Penn Entertainment. This marks a shift for the company and a major move into the USA sports betting arena.
DAZN Group acquired Eleven Sports and Team Whistle in February to boost its rights portfolio across Europe and Southeast Asia. Now, DAZN is reportedly looking to acquire the live broadcast rights for Saudi Pro League football in the UK, Germany and Austria to further position the global sports media firm as the “ultimate sports destination”. Endeavor also announced the acquisition of World Wrestling Entertainment, which they plan to merge with UFC in September.
Women’s football is experiencing an ascendency with the current FIFA World Cup in Australia and New Zealand. FIFA released data showing record breaking numbers of ticket sales, broadcast audiences and digital platform traffic. Whilst the women’s football World Cup still does not receive the same level of attention as the men’s (the 2022 World Cup final in Qatar reached a global audience of 1.5bn viewers), this does represent a step change in the sport. So, what’s next? From a business perspective, higher broadcast and digital traffic numbers are likely to mean what they always do – more money in advertising, sponsorship and sports rights deals.
Barbie-mania
Everyone is talking about Barbie. Whether you care about seeing the movie or not, you’ve probably found yourself in a conversation about it. The latest news is that the movie has broken multiple box office records and has surpassed $1bn in box office sales.
Mattel invested over $100m in marketing this year to make the Warner Bros film a success. Mattel was looking to reinvigorate the Barbie brand after years of declining sales. Movies based on toys have had mixed success in the past from The Lego Movie (also a Warner Bros production) and Transformers (Hasbro and Paramount Pictures), through to lesser-known flops such as the Bratz movie of 2007. The real differentiating factor seems to be the cultural prominence and pre-existing brand awareness of the Barbie franchise. According to a New Yorker article, Mattel is planning the development of 45 other movies to be co-produced by the company’s film division Mattel Films.
Private Equity
Continued uncertainty in the global macro-economy has led to an extraordinary period of quiet for Private Equity firm deal activity over the first half of 2023. According to Bain’s Midyear Report, buyout funds globally generated only $202bn in deal value in H1 2023, a 58% decline on H1 2022*.
Activity in the media and marketing services industry has reflected what we can see more broadly, with private equity and strategic buyers showing caution. However, there have been some key deals in 2023 so far which are noteworthy. KKR backed Mediawan, the French producer, distributor and publisher of audiovisual content, has acquired both Plan B Entertainment and 24 25 Films. KKR has also just announced the acquisition of the global publisher Simon & Schuster from Paramount Global for $1.62bn, and the successful exit of audiobook publisher RBMedia to HIG Capital.
Historically, PE has been reticent to invest in content production and publishing due to the uncertain nature of the return on investment. But with the growth of streaming services and new publishing formats, the growth in demand for content is an attractive opportunity for investors.
Conclusion
Changes to the outlook for the second half of 2023 will depend heavily on inflation and interest rates. But we anticipate increased activity in the market as media groups and investors look to seize growth opportunities and take advantage of improved consumer confidence, demand for content, and new technologies.
*Figures and graph taken from Bain’s Private Equity Midyear Report 2023 https://www.bain.com/insights/stuck-in-place-private-equity-midyear-report-2023/
You can contact Imogen Carter directly via her email icarter@hiec.com
