The major deals by Chinese conglomerates with Hollywood entertainment assets may have fizzled out, but the number of Hollywood investors from other countries remains at a healthy rate of growth. In the first quarter of 2017, there were 256 deals, according to a new report.
The number of transactions grew by 32 percent compared to Q4 2016. It was the highest spike in the level of quarterly increase in deal volume in 24 months. However, the bulk of it was the acquisition of Time Warner by AT&T for $85 billion.
AT&T Deal
Without the AT&T deal, the value would go down to $10.4 billion, or a 92 percent decline compared to Q4 data, The Wrap reported. Bart Spiegel, deals partner at PwC, said that based on anecdotes, valuations did not go down, instead, valuations in target companies remain strong.
He said the strong deals across companies indicated that investors believe in media and entertainment as good places where to park their funds and their confidence in the market in general. But because of the recently broke deals involving China, such as the planned buyout of the Dick Clark Productions for $1 billion by Dalian Wanda, China’s investments in entertainment assets went down.
No Overall Decline
However, Spiegel said that China being sidelined by regulatory restrictions by Beijing does not mean it would have a very big negative effect on the deal universe. It would impact but would likely not result in overall decline in deal volumes and values.
There are a lot of interested buyers in media assets such as current entertainment, media and tech firms in search of vertical integration, plus sovereign wealth funds from the Middle East. One large company interested in acquiring Hollywood assets is cash-rich Apple which has its eyes on Paramount and Sony whose executives met with Apple in March, Biz Journal reported.