2020 in review: Mergers and acquisitions | Industry Trends

Louis Hernandez Jr and Tim Shoulders

At the start of year, media and entertainment executives were extremely confident that mergers and acquisitions would top the agenda for 2020. 

According to a report from EY, published in January, 59% of M&E executives expected to actively seek M&A opportunities in 2019. The figure, from EY’s Global Capital Confidence Barometer, was up from 42% in October 2019 and above the longer-term average of 47%. 

Enter Covid-19. 

EY has yet to release its next Barometer report, but in May – at the height of the pandemic – executives were already losing confidence in future M&A plans.  

“The global pandemic created unforeseen challenges for the media and entertainment sector, which is experiencing significant ongoing disruption to its operations and will face underperformance throughout the duration of the COVID-19 crisis,” explained EY global strategy and transactions M&E leader Will Fisher.  

“Advertising, content production, and businesses related to the physical aggregation of live audiences are experiencing disproportionately severe impacts, with knock-on effects reverberating across the industry.” 

Half of those surveyed after February 19 expected to actively pursue M&A in the next 12 months (49%), down from 59% in October 2019.  

“Given the rapidly evolving situation and the fact that additional restrictions have been confirmed since the survey closed, the deal making intentions expressed are likely to have further deteriorated.” 

There have, however, been some significant deals made in 2020. Take, for example, the latest twist in the saga that has been Grass Valley’s ownership.  

In July, Black Dragon Capital became the fourth company to own GV in the last 20 years, buying it off Belden, which had revealed plans to offload it in 2019. 

The transaction, announced in February, saw Grass Valley come under the control of former Avid CEO Louis Hernandez, who has outlined aims to accelerate the business into a cloud-based technology leader.  

Belden maintains a financial interest in Grass Valley and has entered into a multi-year Transition Services Agreement (TSA) to ensure the smooth handover of key business and operational systems from Belden to Black Dragon. 

A transition in ownership enables Grass Valley to refocus its investment plans in workflows that are flexible, software and cloud native, and enhance customer opportunities at the forefront of industry change. 

That is how Tim Shoulders, who retains leadership at the company, explained the company’s sale to IBC365 after the takeover was announced: “It will help us streamline our decision making and make better decisions that are in the best interest for our customers because the entire organisation, including our ownership, is aligned around this broadcast market and what our customers want.” 


Eyes on virtual 
Sticking with the big vendors and distributors, Sony also made acquisition moves in the media space when it snapped up virtual media production solutions firm Nevion for an undisclosed fee. 

Sony’s acquisition of Nevion will allow the Japanese vendor to better provide an “end-to-end solution” for its broadcast and media customers at a time when the Covid-19 pandemic has accelerated the industry’s push to IP, the company told IBC365 at the time. 

“We see this to be a growing business, one where we need to invest,” explained Kento Sayama, general manager, Media Solutions Marketing Dept – Sony Professional Solutions. “We need to add people we need to add skills, because that’s where the stage is in terms of IP remote production industry.” 

Acquiring Nevion means Sony can have a “wider discussion” with its global customer base, he explained. “It means we’re not limited to one piece of the solution but can offer the entire operational transition for our customers.” 

The deal followed a strategic partnership – announced in 2019 – between the two firms, which had also seen Sony take a 45% stake in the Norway-based company. 

“Nevion specialises in network management, and facility-to-facility management. So together, we can actually support a broadcast project, starting from the facility out to one IP-to-IP connection, and then build what goes into an individual facility,” added Kento Sayama. 

Image acquisition 
Ross Video, a persistent acquirer of businesses, was also active in this space, snapping up Toronto-based Image Video. Image Video was founded in 1974 – the same year as Ross – and is best-known for its TSI tally control platform, used by major broadcast network providers, sports venues, corporate video facilities and houses of worship. 

This acquisition – Ross Video’s sixteenth since 2009 – sees Image Video’s product team led by Zach Wilkie and David Russell, along with their R&D and technical support teams all transition over to Ross.   

Wilkie said: “As a fellow Canadian company that was founded in the same year, we’ve obviously grown up alongside Ross Video and we’ve seen the impressive growth and expansion of the Ross business, especially during the last decade. We’re very pleased to become part of the family and this acquisition will help us reach new international markets and scale much more effectively.” 

Ross Video CEO David Ross added: “Back in 1973, my father was in hospital after breaking his leg. Jim Leitch, the founder of Leitch Video (now Imagine Communications) visited and advised my father to start his own company. He said that there was a Leitch Video and an Image Video in Canada, so there should also be a Ross Video.  

“It’s possible that if Image Video didn’t exist, my father may not have had such role models to show the way, and even if Dad did start our company, we may not be named Ross Video today! All these years later, Image is now part of Ross, something that my father agrees is quite remarkable. Image’s TSI tally platform is a great complement to our existing range of solutions and enables Ross to bring even more choice to the live production market.” 

We also saw deals such as Xperi’s merger with TiVo and EVS’s acquisition of Axon. EVS said the deal “strategically expands its global footprint, enabling customers to benefit from the most comprehensive and integrated range of media infrastructure solutions for live productions” in a statement released when the deal closed. 

Post and VFX companies kept going during the lockdown, using a combination of working from home via remotely connected equipment or social distancing measures. This kept the door open for M&A activity in this sector, too. 

Framestore_Avengers_Endgame - LEAD image

In the VFX space, Framestore used the acquisition market to almost double in size, as it bought Company 3/Method to become the world’s second biggest VFX firm by headcount. 

C3M which includes VFX shops Method Studios, Encore and EFILM, has 3,500 ‘artists, experts, engineers and innovators’ on its books, now added to Framestore’s 2,500 employees.  

The 34-year old company, which made a profit of £19m on turnover of £91m in 2019, has operations in Canada, the US and India. The C3M acquisition boosts capacity in those territories while adding a division in Melbourne. 

Broadcasters slow down 
In recent years, there has been significant M&A activity across the traditional media and broadcast space. At the end of 2019, for example, Viacom and CBS remerged into ViacomCBS. Disney bought Fox last year, while Comcast snapped up Sky. 

In 2020, however, these kinds of deals were a lot less common, in part due to Covid, but also as a result of so much movement in the preceding years. There were, however, some smaller deals that came as a result of previous mega-mergers. 

ViacomCBS completed a deal with BeIN Media Group to acquire a 49% stake in global film and TV studio Miramax for around $275 million. BeIN will retain its 51% stake in the studio group as part of the…

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