Movers and Shakers: M&A Wrap-Up
By: Tim Young
As 2015 draws to a close, some corners of the communications market are getting less crowded as mergers and acquisitions see competitors become subsidiaries.
It has been a big year for market consolidation. According to a report by Mergermarket, a business development firm which focuses on mergers and acquisitions (M&A), merger activity in the technology, media and telecom sector during Q1-Q3 2015 reached its highest value since 2006, and second highest value since the firm began tracking the industry in 2001. These transactions were valued at $534.2B, a total already higher during those nine months than what was seen during all of 2014.
This is part of a larger M&A trend seen in a wide array of sectors in 2015. Mergermarket reports that global M&A reached a record value of $2.87 trillion in the first three quarters of 2015, up 24% compared to Q1-Q3 2014. By the end of Q3, M&A activity targeting US-based firms alone had already topped every year since the firm started keeping records in 2001, with three more months of acquisitions yet to be counted.
So our industry’s M&A activity isn’t unique, but there’s no doubt that it’s been a leading trend in 2015, and one that will likely continue into the new year.
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“The wireless and telecom space has certainly changed,” analyst Jeff Kagan told Pipeline. ”Ten years ago there were loads of smaller competitors. After a decade of mergers today there are fewer and larger competitors.” This goes for carriers and the integrated communications and entertainment (ICE) technology companies that support them.
Here are some of the highlights from 2015 and what they mean for the industry:
CARRIER ACTIVITY
Charter Communications, Time Warner Cable and Bright House
With a big deal and a less-big deal, the new Charter will become the second largest cableco and fourth largest pay-TV provider in the United States. The deal involves Charter (NASDAQ: CHTR) paying $55B in cash and stock for Time Warner Cable (NYSE: TWC), and when you include debt, the deal is valued at $78.7B. Privately owned Bright House comes along for another $10.4B, and the combined company will have some 23 million subscribers (while Comcast still retains the top spot among US cablecos).
This landmark deal is huge for a number of reasons. It’s the largest merger in the industry’s history. It creates a two-horse race for cable primacy in the U.S. It gives the new company the scale it may need to navigate an era of cord-cutting and increased squabbling with content providers. And on the human interest side, it brings John Malone—former CEO of cableco TCI, which was acquired by AT&T in 1998 in what is now the second largest acquisition in cable industry history—back into a major role in the U.S. cable landscape. (The latter is a point that the Wall Street Journal has been particularly keen on exploring.)
