Mergers & Acquisitions 2018 – Part 1

Tom Pammenter Published: 19.02.2018 Mergers and Acquisitions in Broadcast and Media

In our first blog post of 2017, we looked at four mergers, acquisitions and collaborations.

2018 has begun in a similar fashion, as a recent flurry of mergers and acquisitions appears to develop further.

So here, in the first of a new two-part series, we look at who’s been active in the market. Three major deals have caught our eye, arguably the biggest of which is in the process of regulatory review and expected to go through in 12-18 months:

Disney acquiring Fox

We initially looked at the proposed acquisition of Fox by Disney here.

Bob Iger, Walt Disney Company chairman & CEO, expanded earlier this month on his company’s position in the process of acquiring Fox assets including:

20th Century Fox
Fox’s 39% stake in Sky
A 30% stake in Hulu, the streaming service
Fox 21 Television Studios
FX, the award-winning cable and satellite channel
The X-Men franchise
National Geographic

He said:

When you do a deal like this, you immediately, essentially apply for regulatory approval in multiple jurisdictions around the world and that process is underway right now, where we are filing in places that we must file. That process will take a while, as we said when we closed the deal. We don’t really have much insight right now, in terms of the timing of that, except that we’re following, basically, the rules or the laws that we have to follow when something like this occurs. We were encouraged, when we made the deal, about the prospects for regulatory approval and we remain that way. We’ve spent the last six weeks or so learning more about their businesses. In particular, I’ve been meeting with all their senior executives and I’ll say that knowing what we know now we’re even more encouraged by the assets that we’re buying and the talent that comes with it.

In the interview with CNBC, the suggestion was put to Mr Iger that another huge player in the industry – “maybe, say, a Comcast” – could come in and effectively make Fox a better offer. The Disney boss refused to be drawn on the possibility.

Belden buys SAM

One recent major deal that has been confirmed is the acquisition of the British manufacturer, Snell Advanced Media (SAM), by Belden.

SAM will be merged with Grass Valley, another Belden brand, based in Montreal, to form a new company taking the Grass Valley name, with SAM ceasing to exist (although we understand many SAM products will continue in their current form).

Belden is a US-based multi-billion-dollar company which bought Grass Valley in 2014 for a reported $220 million – just one of a number of acquisitions it’s made in the broadcast sector.

And now it’s acquired SAM for $94.2 million, as per this recent statement:

On February 8, 2018, we acquired a company for a purchase price of $75.8 million, plus we assumed debt of $18.4 million. The acquisition includes a potential earn-out for which we have not yet estimated a fair value. This acquisition was funded with cash on hand.

We are in the preliminary phase of the purchase accounting process, including obtaining third party valuations of certain tangible and intangible assets acquired. As such, the purchase accounting process is incomplete and we cannot provide the required disclosures of the estimated fair value of the assets and liabilities acquired for this business combination.

Grass Valley say it and SAM will combine on a single stand at April's NAB show in Las Vegas, where a formal unveiling of the deal is expected to take place.

Amdocs buys Vubiquity

Another proposed deal is Amdocs’ acquisition of Vubiquity, a key distributor of premium content which “fits into Amdocs’ focus on hundreds of communications companies around the world”, according to this report.

Amdocs have “entered into a definitive agreement to acquire Vubiquity, a leading provider of premium content services and technology solutions”, essentially to enable it to diversify its business.

Effectively, this deal represents a software and services specialist wanting to push further into the media and entertainment business by buying – for $224 million – a company that offers “premium content services...from licensing to delivery”.

But what, exactly, is Amdocs buying?

Vubiquity...

A company with about 500 employees
Has access to relationships with more than 600 content owners, including major networks, studios, digital-first networks and independent content owners
Delivers content to 121 countries in 80 languages
Can help Amdocs with the complexities of content licensing and rights acquisition
Complements Amdocs's expertise in areas such as subscriber management

Eli Gelman, the president and CEO of Amdocs – which last year bought Vindicia, a company that makes a cloud-based subscription billing platform for digital media and OTT content offerings – said of the deal to acquire Vubiquity:

We’re seeing increasing convergence between traditional wireless and pay TV distributors, content owners and large OTT virtual players. By acquiring Vubiquity, we believe Amdocs will be uniquely positioned to address the requirements of distributors, content owners and Web players as the lines between each become increasingly blurred.

Amdocs will showcase its media and entertainment solutions at Mobile World Congress in Barcelona at the end of the month.

As the importance of IP, 4K and cloud-based services grow, and the media and entertainment industries continue to evolve and converge, levels of competition and uncertainty are unprecedented in the broadcast industry.

All three of the above deals are designed to increase the acquiring companies’ diversification and consolidation in the market.

In part two of this series, we turn our attention to some of the more important acquisitions over the last few years.

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