NEW DELHI: After a season of big deals in FY25, media and entertainment (M&E) companies are likely to focus their attention on filling up small, but crucial gaps in their portfolio through mergers and acquisitions in FY26.
Segments such as content creation, artificial intelligence (AI), gaming and sports could be areas that M&E companies could look at closely as they eye growth for the future, experts and investment bankers said.
“As media and advertising budgets increasingly shift towards new media avenues, traditional players will need to adopt innovative business models to stay competitive. This evolution is likely to drive traditional media companies to pursue tuck-in acquisitions to capture emerging market trends,” said Ashish Pherwani, M&E sector leader, EY India.
Pherwani sees more outbound deals as well as private equity (PE) investments growing in the sector. Regional over-the-top (OTT) platforms may also be acquired by larger companies or see investment from PE firms as consolidation moves from the national to the regional space, experts said.
For instance, regional OTT platforms such as Chaupal (focuses on Hindi content), Stage (offers Haryanvi and Rajasthani content) and Aha (Tamil and Telugu content) have been looking to raise fresh capital from venture capital and PE firms to grow their businesses.
Meanwhile, deals in the AI and content marketing space is likely to get a boost after successful acquisitions by companies such Prime Focus and Connekkt Media in recent months.
Mumbai-based Prime Focus, for instance, announced that one of its units, Brahma, had acquired London-based AI content firm Metaphysic in a deal valued at $1.43 billion in February. Connekkt Media, also Mumbai-based, acquired Hollywood content and marketing agency Mob Scene a few weeks ago. Mob Scene is best known for its marketing campaigns for blockbusters such as Barbie, Avatar: Way of Water and Dune: Part Two, among others.
Promoters of both firms said that they were open to more tie-ups and acquisitions in the future. “This acquisition (of Mob Scene) marks a strategic expansion for us into the US and the rest of North America,” Varun Mathur, co-founder, Connekkt Media, said. “We will bring their marketing capabilities to our partners across the world. We also continue to scan the landscape for more acquisitions,” he said.
Prime Focus founder and global CEO of DNEG, Namit Malhotra, said that Brahma’s AI-powered tools could be used across industries such as education, social media engagement and content creation besides entertainment.
“Our focus now (through Brahma) is on the next generation of technology tools powered by artificial intelligence. Our eyes will be open to bring anything that will validate what we are doing,” he said.
Experts at Grant Thornton Bharat say that newer players are also likely to mark their presence in sectors such as sports and gaming in their quest for growth.
Ahmedabad-based Torrent Group, for instance, said last month that it was acquiring a 67% stake in Indian Premier League (IPL) franchise, Gujarat Titans from Irelia Company, owned by CVC Capital Partners for Rs 5,000 crore. The deal, which marks the entry of the Torrent group into cricket, valued Gujarat Titan at Rs 7,453 crore. This is 33% higher than its 2021 value when CVC Capital picked up the franchise for Rs 5,625 crore.
“There has been a notable surge in sports and gaming deals, as companies look to partake of growth within these sectors,” Shanthi Vijetha, partner, due diligence, Grant Thornton Bharat, said.
Besides Torrent Group, Sun Group-led Sunrisers Hyderabad recently picked up a 100% stake in an English cricket franchise called Northern Superchargers, which is part of an eight-team cricket league called Hundred. The investment was for over `1,000 crore. The Sun group is the third investor in Hundred after the Ambani family, who are behind the IPL’s Mumbai Indians, and RPSG, in charge of the Lucknow Super Giants, also picked up teams in the league.
Source: The Financial Express
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