Iconic media companies have long proven resilient amid disruption. But with content consumption and distribution trends shifting ever more rapidly, there’s no guarantee of survival—one major reason why storied media brands are teaming up and looking to combine assets to strengthen their position and prepare for a new era, whatever it might look like.

Traditional media was already in the late stages of this transformation, with leaders beginning to comprehend the new landscape, when COVID-19 arrived to radically disrupt everyday life. Recovery from the pandemic disruption will likely dominate operational strategy in the near term, even as companies consider how to address the broader and longer-term transformations in media and entertainment.

Dealing with disruption

To adapt to these changes, media companies have consistently used M&A to remain competitive and future-proof businesses. Since 2014, companies have executed more than US$700 billion in strategic M&A deals across media and entertainment sectors,¹ highlighted by transactions such as the Walt Disney Co.’s acquisition of 21st Century Fox’s entertainment assets and AT&T Inc.’s acquisition of Time Warner Inc., including its HBO and Turner assets. Just as unprecedented change has forced companies to consider transactions—such as merging with a fierce rival—that would have been unthinkable years before, it may cause companies look to invest in areas previously ignored or out of their comfort zone.

Globally, the broader telecom, media, and entertainment sector M&A volume fell by 17% in the first half of 2020 compared to a year earlier, while value is 47% down. In the United States, the sector has been far more resilient, with volume down only 4%. But the 45% decline in deal value suggests that companies are looking at small and midsized deals following the megamergers, albeit with continued pandemic-related uncertainty also hampering valuations. Although the economic outlook will loom large, M&A deal pricing is likely to be influenced by demand for and supply of independent targets.