John Malone
AP Photo/Paul Sakuma

Major media and entertainment companies didn’t get together like they once did.

Despite high-profile deals such as Charter Communications’ $56 billion play for Time Warner Cable, these conglomerates opted for a wait and see approach. That meant that the number of high-profile mergers and acquisitions dropped by 7% in 2015, according to a new survey by professional services firm PwC.

Overall, there were 816 announced deals last year, down from 886 in 2014, and the fourth quarter of 2015 was one of the slowest in recent history for mergers. Only two pacts that came to fruition within the final three months of the year — Expedia’s deal for HomeAway and Endurance International Group’s purchase of Constant Contact — were valued at more than $1 billion.

The study posits that the slowdown may be attributable to companies wanting to see if major mergers, such as Charter’s play for Time Warner Cable, receive regulatory approval.

It also could be reflective of macroeconomic trends. Media stocks have been hit hard in recent months as Wall Street has grown concerned about the long-term health of the cable business. Cord-cutting, the buzzy term for consumers who prefer to ditch cable for cheaper streaming services, is driving many of those fears.

The study’s author, Bart Spiegel, PwC’s partner for entertainment, media and communications deals, said he didn’t think that the falling stock prices of media giants was impairing their dealmaking ability.

“Those companies interested in M&A activity have an asset base that allows them to get things done regardless of market volatility,” he said. “Traditional media and entertainment companies have access to a significant amount of capital.”

And, for the most part, companies were still willing to write big checks to nab their prizes. The value of deals in the entertainment and media sector rose to $149 billion, a 13% increase over the value of the deals signed in the previous year. That was largely attributable to two megadeals, both of which originated with Charter — the Time Warner Cable purchase and the $11 billion deal for Bright House Communications. Those made up 45% of the overall deal value.

Charter’s aggression is not surprising. John Malone, the billionaire who is seen as the driving force behind the telecommunications giant, has stated publicly that he believes that consolidation in the pay-TV sector and of content creators is inevitable as they seek to find the kind of scale that will enable them to ride out the rise of digital forms of entertainment.

Malone isn’t alone. The shakeup in how programming is being delivered — across multiple devices, from the cloud or via stream — is driving activity in the mergers and acquisitions space, claims PwC.

“The consistent theme is that all these companies need to find a place on the digital value chain,” Spiegel said.

The report speculates that the deal market will pick up in 2016, regaining its former stride as companies look to get bigger to maintain their status in a shifting digital landscape.

“It’s a very dynamic marketplace and that forces people to be aggressive,” Spiegel said. “Companies have to think about what do they want to be and how do they want to get there.”

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