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BFD Expert Voices - Media Deals

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Cautious optimism about dealmaking flowed through the presentations and conversations at IAB's Annual Leadership Meeting this past week.

Why it matters: After a year when economic and industry challenges hit from both sides, media executives and investors are kicking off 2024 with an eagerness to explore deals, Kerry writes.

What they're saying: "Our pipeline is full," Shamrock Capital partner Laura Held said during an IAB panel on the state of dealmaking. "The big question [is] ... the activity might be up, but what actually gets done?"

"I'm optimistic. The bar is low compared to 2023," Providence Equity Partners managing director Lucy Dobrin said on the same panel.

"I think the ice is melting, but it's melting really slowly," Spotify vice president Sheila Spence added. "A lot of companies like us have this amazing, like, super-fit feeling right now ... but that means the bar is really high."

Meanwhile, during an onstage interview with Paramount Global CEO Bob Bakish, IAB CEO David Cohen asked about sale chatter. Bakish acknowledged the reports but expressed caution.

"99% of deals don't happen," Bakish said. "That's just the way it is. Get all the stars to align; it's not that easy."

"There's certainly a case for consolidation in media," he added. "But that's different than saying something's certainly gonna happen."

The intrigue: Potential buying opportunities surround software businesses that support data collection and collaboration, given the deprecation of internet-tracking cookies.

Snowflake acquired data "clean room" startup Samooha in December. And just two weeks ago, LiveRamp announced its acquisition of Habu.

LiveRamp CEO Scott Howe and Habu CEO Matt Kilmartin both attended the IAB conference, taking meetings together to discuss their merger with existing and potential clients.

"Our dance card is full," Howe quipped in a conversation with Axios.

What's next: Enthusiasm is bubbling around generative AI.

Howe says LiveRamp is on a "giant, fact-finding, collaboration spree" about generative AI. "There is so much hype about Gen AI, but it's not hype. It's real. Maybe not as companies but as applications."

Spotify's Spence said on the dealmaking panel that the "build, buy, partner" framework is "critical around AI." She noted that Spotify acquired AI voice platform Sonantic with the goal of owning the technology but is also seeking generative AI partners.

M&A optimism bubbles up in media industry

1 big thing: M&A optimism bubbles up

Paramount Global CEO Bob Bakish and IAB CEO David Cohen sitting on chairs on a stage with IAB AM '24 It Starts Here in the background

Paramount Global CEO Bob Bakish and IAB CEO David Cohen. Photo: Kerry Flynn/Axios

Disney is close to a deal to sell 60% of its India business to Viacom18 and Bodhi Tree Systems in a deal that values it at $3.9 billion, the Wall Street Journal reports.

Why it's the BFD: The deal price is significantly less than the $15 billion-$16 billion the business was valued at when Disney bought it from Fox, Tim writes.

Details: Viacom18 will hold the majority stake, around 51%, while Bohdi Tree will hold a 9% stake. Disney will keep the remaining 40%. 

Viacom18 is a joint venture among billionaire Mukesh Ambani's Reliance Industries, Paramount Global and Bodhi Tree Systems. Bodhi is an investment firm founded by James Murdoch and ex-Star India CEO Uday Shankar.

Shankar was CEO of Star India for a decade until he left in 2020, a year after Disney acquired the business. Murdoch helped build Star India during his days with Fox.

Disney's India business, also known as Star India, includes the company's family of TV networks, streaming service Hotstar and a minority interest in satellite TV company Tata Sky.

The big picture: This marks an unglamorous ending for Disney's ambitions with Star India, which was considered one of the crown jewels of its $71.3 billion takeover of 21st Century Fox.

The loss of hugely popular cricket league streaming rights — to Viacom18, no less — sunk the business.

Disney was able to radically beef up its subscriber count when it integrated Disney+ within Star India's preexisting Hotstar streaming service in 2020. 

At one point, it accounted for more subscribers than any other territory, including the U.S., but the service was priced very low in India, which dragged down revenue.

What's next: The deal is expected to close this month, per WSJ.

Disney to sell Star India to Viacom18, Bohdi Tree

2. The BFD: Disney finds India buyer

Mukesh Ambani in April, in Mumbai. Photo by Prodip Guha/Getty Images

Advertisers' lack of commitment to funding news publishers has gotten worse as many choose to avoid the sector entirely.

Driving the news: About 32% of U.S. advertisers have been given directives to completely block the news category, according to a recent study by Prohaska Consulting that was presented at IAB's Annual Leadership Meeting this week, Kerry writes.

Of note: The percentage of ad budgets directed to news was already small and has dwindled from year to year, GroupM U.S. chief digital investment officer Susan Schiekofer said during an Axios-moderated panel at the event.

Zoom in: The media market has rapidly evolved, with ad dollars flowing to tech giants and away from legacy publications. Companies like Meta and Google have captured more ad dollars because they offer a high return on ad spend and easy ad-buying tools.

What they're saying: In addition to the charitable reasons to invest in the journalism industry, Schiekofer noted advertisers should be motivated by the high traffic and engagement around news stories.

Meta vice president Samantha Stetson said on the panel that she wants advertisers to think less about what "content to avoid" and more about what content they want "to support" and "be around."

The other side: For their part, news publishers could do more to "reengage" with the ad industry, Columbia Journalism School professor Bill Grueskin said on the panel.

"I think advertising used to provide a lot information, a lot of readers wanted it, whether it was housing ads or sales on tires," Grueskin said, noting that ads have moved on to other platforms and the news industry needs to pull them back.

The bottom line: The lack of ad dollars has decimated news outlets, leading to layoffs, fewer investments, consolidation and the shuttering of many local newspapers and digital media brands.

3. Advocating for advertising in news

GroupM's Susan Schiekofer, Meta's Samantha Stetson, Columbia Journalism School professor Bill Grueskin and Kerry Flynn sitting in chairs on a stage with IAB ALM '24 in the background

GroupM's Susan Schiekofer, Meta's Samantha Stetson, Columbia Journalism School professor Bill Grueskin and Kerry Flynn at IAB's Annual Leadership Meeting on Tuesday. Photo: Kirsten McKenna

Go deeper in our full database in the Axios Pro Deals Tracker.

• TikTok completed its deal to buy 75.01% of Tokopedia for $840m from Indonesian tech conglomerate GoTo. https://axios.link/3vU7Bc5

• Canal Plus, the Vivendi-owned European pay-TV giant, offered to buy all the shares it does not own in South Africa's MultiChoice Group in a deal worth roughly $1.7b. https://axios.link/3SFQcg4

• Primary Wave Music has acquired a 50% stake in the Brazilian music company Nas Nuvens Catalog in a deal that values the business around $100m. https://axios.link/3UooQfP

• Francisco Partners completed its acquisition of The Weather Company assets, which include Weather.com, Weather Underground and Storm Radar, from IBM (NYSE: IBM) for an undisclosed amount. https://axios.link/498JEw2

• Spotify announced Alex Cooper's "Call Her Daddy" podcast will keep exclusivity on video but the audio will be available widely as it moves away from its exclusive distribution strategy. https://axios.link/48XTelx

4. Deal flow

• The Messenger laid off about 300 employees as the news startup shuts down, Sara Fischer reports. https://axios.link/3OqGhZi 

• Audacy is laying off 12 people, about 25% of its staff, from its Pineapple Street podcast division. https://axios.link/484YEtH

5. Movin' on up (or out)

🧐 Byron Allen, offering $14 billion for Paramount, has a long history of media bids that haven't materialized (CNBC)

"Allen told CNBC via phone Wednesday that he lost out on several deals because ownership changed course on wanting to sell. He highlighted his acquisition of The Weather Channel in 2018 for a reported $300 million and broadly defended his track record, invoking baseball Hall of Famer Babe Ruth," Ryan Anastasio writes.

🤝 The Onion union reaches tentative deal with management, averting strike (THR)

"The negotiations have been turbulent and, at times, acrimonious. On Jan. 12, 97 percent of the bargaining unit at The Onion Union signed a strike pledge vowing to commence a work stoppage if no new contract deal was reached by Wednesday," Katie Kilkenny writes.

🎥 Bye-bye, golden parachute: Scott Stuber's pivot to producing comes amid a harsh landscape (Variety)

"Though he has told friends that he has raised money for his new unnamed production company, it is unclear who is providing the funds. ... Sources say Stuber has amassed enough to cover both development and production and won't need to latch on to an existing property at Netflix in the [Amy] Pascal vein," Tatiana Siegel reports.

6. Channel surfing

Illustration of a remote control in the shape of a surfboard leaning against a VW bus.

😕 Situational awareness: Hulu will begin cracking down on password sharing, following Netflix and Disney+. 

@tim_bays: Pacers vs. Knicks at Madison Square Garden. My wife, who grew up in New Jersey, has never been to MSG. Tonight, I rectify this tragedy.

@kerrymflynn: Shrek Rave at Big Night Live in Boston. Unclear if this is simply "All Star" by Smash Mouth on repeat, but I'm really looking forward to it. 

✏️ Thanks to Michael Flaherty for editing and Katie Lewis for copy editing this newsletter.

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February 01, 2024

1 big thing: M&A optimism bubbles up