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Content is still king. With Dalian Wanda Group’s $3.5 billion acquisition of Legendary Entertainment in January, this year’s media and entertainment M&A activity kicked off with a bang that hasn’t slowed down.
Comcast’s $3.8 billion acquisition of DreamWorks Animation just three months later continued the trend of content consolidation and IP aggregation. Both transactions have varying motivations, but the common denominator is access to franchises and content that can be leveraged across the parent companies’ various business units.
Content and digital transformation strategies have driven M&A activity so far in 2016, with no signs of slowing down — and thus providing clues about where we’ll see activity during the rest of the year.
One major trend that continues is Chinese investment flowing into the United States. Almost 50 percent of all U.S.-targeted M&A transactions from foreign investors came from China in Q1, and media and entertainment is a significant driver of that figure. In addition to acquisitions, there were a number of investments in U.S. film studios, including Film Carnival’s $500 million investment in Dick Cook Studios and Perfect World Pictures’ $500 million investment in Universal Pictures’ upcoming film slate.
China’s continued interest in gaining insight into how Hollywood works is paying off for both sides of these deals. This insight will continue to help them ramp up their own production capabilities and speed up their ability to compete with the current global content creators. As a result, Chinese investment and M&A in U.S. media and entertainment should continue throughout 2016.
Wanda’s massive Legendary transaction allows it to vertically integrate content production with its exhibition business. Its announced acquisition of Carmike Cinemas in March for $1.1 billion added more theatres to its current count, which already includes other global exhibitors. This news came days after Wanda announced plans for a $3.3 billion theme park outside Paris. When viewed as a whole, this ecosystem of content and distribution outlets positions Wanda as a global media and entertainment leader for the foreseeable future.