Investors eye UK media firms

25 November 2010

LONDON: Private equity firms in the UK are keen to invest more heavily in media companies next year, as digital drives interest in the sector.

Business consultancy Grant Thornton surveyed leading executives, and found that music, consumer publishing and TV were not considered among the most attractive propositions.

However, more than two-thirds of those polled said they expected to reassess their media activity over the coming 12 months, with 90% definitely planning to invest.

While the report, based on a confidential survey of 40 private equity groups with a previous track record in UK media investment, finds that digital media will be top of the list, it isn't alone in drawing attention.

Business-to-business publishing and events firms, which have traditionally displayed more resilience than consumer-facing businesses, are now the second most attractive targets for investors.

Mergers and acquisitions activity in UK media has fallen in the recession, says the report, with deal values down 75% to £370m ($584m; €438m) in 2009.

More recently, however, M&A activity has been on the rise, says Grant Thornton, with some 36 deals worth a combined £904m being concluded by the end of Q3 this year.

While digital has clear appeal for those looking to invest in 2011, music is seen as having the least cachet, followed by consumer publishing, TV and film.

"In consumer publishing, business models are shaking out and people can't see where things are going to go," said Mark Henshaw, head of media and entertainment at Grant Thornton. "That could be part of the reason it's in the doldrums."

He added: "Private equity investors may be waiting to see if the likes of the iPad will help save consumer publishing and would rather keep their powder dry in the meantime."

Data sourced from Financial Times; additional content by Warc staff