Media

Q1 2023 saw 50 deals in the Media sector. This was a significant decline from the previous quarter (85 deals) and could be an indication of further contraction in the sector.

Within the last quarter perhaps the standout deal observed was the acquisition of UserTesting Inc, a video-based human insight leader, by software investment firm Thomas Bravo and Sunstone Partners in an all-cash deal valued at c£1.07 billion.

Media ranks fifth in our sector coverage model for M&A volume and the deals activity therein have been influenced by:

• Advertising – with media being increasingly consumed through mobile devices, companies will try to maximise mobile advertising revenue to boost margins.
• Technology – companies will seek to improve media content for mobile devices whilst leveraging technology to gain further customer insights to maximise customer retention.

We have continued to observe the prevalence of financial stress and consequently rate the restructuring activity in this sector as high, consistent with the last two quarters. With rising costs, consumers are becoming more cautious with their discretionary spending on areas such as media subscriptions and businesses are having to work harder to validate advertising business cases. We have noted profit margins eroding and continue to anticipate challenges in the sector for the foreseeable time.