The Race For Digital Media: Verizon Went On A Buying Spree In 2016 As Media & Communications Industries Fused

2016 saw a series of moves that further consolidated the media landscape. Verizon reportedly moved closer to acquiring Yahoo, the creation of Group Nine Media came out of the merger of 4 distinct digital media entities, and NBC acquired DreamWorks Animation for approximately $3.8B.

Large media and communications companies, such as Verizon (which alone acquired 7 companies last year), The New York Times Company, Hearst Corporation, and Comcast made over 100 deals to startups last year. And funding and deal count from private market transactions involving these corporates have been growing every year since 2012. 

While acquisitions are nothing new to the industry, averaging 20 per year since 2012, media companies are now planting their flag in emerging tech areas such as VR/AR and diversifying into adjacent areas such as information and software, as Hearst did with its recent acquisition of aviation software company CAMP Systems. 

As new content distribution platforms debut and niche offerings such as The Wirecutter carve out audience share, companies such as News Corp and Verizon are betting on tech startups to spur innovation and revenue opportunities. In addition, telecommunications companies have moved aggressively into media creation and distribution while continuing to make acquisitions and investments that cut across services and devices. 

Below, we used CB Insights data to study the acquisition patterns of media giants since 2013.

We identified 22 media and communications companies that have been the most active investors in private markets in recent years, and used CB Insights tools to analyze their activity. We included some telecommunications companies involved in media distribution but excluded Hollywood studios.

Many of the companies below have been the target of acquisitions, or were spun off from parent companies at some point in the period under study. They are marked with an asterisk.

These corporates are:

1. The Washington Post*
2. Hearst Corporation/Hearst Ventures
3. Bertelsmann/Bertelsmann Digital Media Investments
4. Axel Springer/Axel Springer Digital Ventures
5. Time Warner Cable/Time Warner Investments*
6. AOL/AOL Ventures*
7. The Walt Disney Company/Disney Accelerator
8. News Corp
9. Comcast/Comcast Ventures
10. Discovery Communications
11. Sky TV and Sky Broadband
12. Verizon/Verizon Ventures
13. The E.W. Scripps Company
14. The McClatchy Company
15. Gannett*
16. tronc/Tribune Digital Ventures*
17. Viacom
18. NBCUniversal*
19. Fox Broadcasting
20. A&E Television Networks
21. The New York Times Company
22. CBS

Key takeaways from the timeline: 

• In 2016, Verizon Communications, AOL’s parent company, was the most active company on the list in M&As. Verizon is followed by Group Nine Media (due to a simultaneous merger of The Dodo, NowThisMedia, and Thrillist Media), The New York Times, and Comcast. Recent Verizon acquisitions include video capture and monitoring company Volicon, mobile enterprise management platform Telogis, Wi-Fi kiosk company LQD Wi-Fi and smart lighting developer Sensity Systems.
• 2016 saw over 30 M&A deals by large media companies, more than any previous year. No year prior to 2014 saw M&A deal totals above 19. Since then, two of the past three years have seen 25 or more M&As.
• AOL has been another active acquirer since 2013 with 11 acquisitions. Recent deals include the January 2016 acquisition of Paris-based AlephD, a startup that helps publishers determine ad price, and April acquisition of virtual reality platform RYOT. RYOT is a virtual reality platform known for its film and documentary style content.
• The New York Times recently acquired gadget review website The Wirecutter, social media marketing company HelloSociety, and virtual/augmented reality design agency Fake Love. Previously, the company’s last M&A deal was the 1999 acquisition of Abuzz Technologies, developer of e-mail based knowledge management software.
• Since 2013, News Corp has made 5 acquisitions and 1 corporate majority stake, none of which went to US-based companies. From 1992-2010, 77% of their acquisitions were to US-based companies. This has since shrunk to 18%. Recent deals include the February corporate majority stake in Thailand-based real estate management platform Diakrit International and 2015 acquisition of India-based VCCircle, a financial news website.
• A few of the deals listed below involved more than one acquirer:
  • Fox Broadcasting, NBC Universal, and the Walt Disney Company took a corporate majority stake in Hulu in 2013. Also that year, Univision Communications and Disney launched Fusion. Disney has since exited Fusion.
  • ALL3MEDIA was acquired in 2014 by Discovery Communications and Liberty Global.
  • Last year, Complex was acquired by Hearst and Verizon in a deal valued between $250-300M.
  • In October it was announced that digital media companies Thrillist Media Group, NowThis Media, and The Dodo would be merging with Seeker, a division of Discovery Communications, to form Group Nine Media. As part of the deal, Discovery invested $100M in Group Nine.

Click on the image to enlarge. Height of company line has no correlation with deal value.

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