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Streaming is mainstream – and whether a song, playlist or podcast, streaming audio represents one of the most exciting, dynamic and high-growth entertainment markets today

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Sector Report: Internet & Digital Media Q1 2020

EXECUTIVE SUMMARY

  • Internet & Digital Media was a highly active category with ~$15.3Bn in M&A volume and ~$11.7Bn in financing volume during Q1 ‘20
    • 17 M&A transactions closed in Q1 ‘20 including Penn National / Barstool (Internet Content), Najafi Companies / Tegna (Diversified Marketing) and Fox / Tubi (OTT Streaming); of these transactions, ~18% were completed by private equity firms via leveraged buyout
    • 656 financings across all stages – from seed to LBO – in Q1 ’20 which was down ~8% from Q1 ’19
  • High-profile, internet content M&A deals highlighted Q1 ‘20 activity, with strategic buyers looking to build out their offerings, remain competitive and differentiate themselves from emerging competition while also looking to add significant brands and engaged audiences
    • NuCom Group’s acquisition of The Meet Group (NASDAQ: MEET) and The San Vicente Group’s acquisition of Grindr represent approximately $1.1Bn of deal value in Q1 ’20, illustrating further consolidation and activity in the mobile dating app business
  • Transactions involving stand-out digital brands including The Ringer, Barstool Sports and The Athletic highlighted robust activity among content creators and new digital platforms; this is thematically consistent with a trend we have been observing for years
    • These three deals alone represent roughly $1.2Bn in overall digital media deal value in Q1 ‘20
  • From a financing perspective, Q1 ’20 saw a number of well-established private equity firms invest in popular, growing consumer companies, aiming to strengthen their foothold in the sector
  • From a trading perspective, Marketplace companies lead the public company pack, trading at 4.8x EV / ’20E Revenue and 17.1x EV / ’20E EBITDA on average
    • Trading multiples for companies across digital media subsectors are deflated due to the public market impact of COVID-19
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