There’s plenty of capital around the world that could be put to work across Asia-Pacific broadcasting and pay-TV.
Much of it remains untapped however, as investor prefer double-digit growth stories at reasonable valuations.
India, more than any other market, falls into this basket although there remain execution barriers across pay-TV and broadband in particular.
Indonesia and other parts of Southeast Asia have become too expensive (i.e. asset valuations) and there are control issues (i.e. caps in FDI) for strategic international investors.
One key trend that’s solidifying is the value of assets anchored to digital and broadband (i.e. providers of bundled multiple products or pure-play broadband) in emerging markets.
“Such businesses are set to secure capital and attractive valuations in the years to come,” says Vivek Couto, director of industry analysts Media Partners Asia (MPA).
M&A value in Asia-Pacific broadcasting and pay-TV topped US$4.8 billion over 2014 and Q1 2015, according to Thomson Reuters. This represents decent growth from the same 15-month period over 2013-14 but a big drop from US$13 billion recorded in 2012-13.
The biggest deals have occurred in China and India, involving cable, DTH, broadcast and multimedia assets (i.e. Wasu Media in China and Videocon d2h in India), followed by Korea and Japan.
IPO activity was somewhat muted in 2014 but debt funding (i.e. loans and bonds) totaled US$2.5 billion, driven by cash-generative businesses in Australia, India, Japan, New Zealand and the Philippines.
Going forward, there will be more investment flowing into the emerging OTT video ecosystem, says MPA, with deals already beginning to flow in 1H 2015 (e.g. PLDT’s investment in iFlix; a JV between Singtel, Sony and Warner to launch Hooq).
Deal values are small at present but could rise substantially over the long term as economics and execution evolve. A number of private equity firms are circling around greenfield and emerging opportunities at present.
In the meantime, MPA expects a number of cable and content deals to occur in Korea, Taiwan and India over the next 6-12 months.