European content-production houses are engaging in a wave of consolidation in order to gain scale in a competitive environment.

Video-streaming platforms have been slowing their pace of spending on content globally. At the same time, recently rolled out EU regulations requires streaming giants to spend more on local content.

Taken together, these factors have put pressure on media houses — from film studios to audiovisual producers — to scale up their premium offerings. M&A is often the result.
In the year to date, around EUR 1.7bn worth of content production studio deals in Europe have been completed across 47 deals, according to Mergermarket data. This represents a significant uptick from the doldrums of 2023, which saw EUR 208m worth of deals across 48 transactions.

KKR‘s [NYSE: KKR] decision to combine its Paris-headquartered portfolio company Mediawan, the production house behind Call My Agent!, with German peer Leonine Studios underscored the latest appetite for media house consolidation.

Abu-Dhabi backed investment group RedBirdIMI‘s GBP 1.15m (EUR 1.4bn) takeover of UK production house All3Media from Warner Bros Discovery [NASDAQ:WBD] and Liberty Global [NASDAQ:LBTYA] earlier this year also serves as a bellwether for the appetite for premium production houses, marking the largest deal this year so far, according to Mergermarket data.

Smaller media content creators have also been snapped up as part of a post-pandemic bounce in the wider sector. Announced deals this year include an investment of USD 200m in audio-visual company DNEG Group from UAE-based United Al Saqer Group.  

The Reel Deal

Appetite for European content producers is expected to revive dealmaking in the sector. KKR is reported to be weighing a potential sale of its combination of Leonine Studios and Mediawan in 2025 which would mark a sale of one of France’s largest production houses. Federation Studios, another French production studio, has also been weighing strategic options including a potential sale.

ITV [LON:ITV] had also previously explored a sale of a stake in its studios division which was expected to value the division at close to EUR 3bn. The UK broadcaster had separately also been subject to private equity interest earlier this year although an approach failed to materialise.

Elsewhere, the owners of Technicolor, one of the oldest audiovisual firms, are working with advisors at The Raine Group to explore a potential sale of the business, which has EUR 500m revenues. Technicolor itself has been eyed by private equity, Middle Eastern sovereign wealth funds, as reported.

Overseas eyes 

And as for interest in Technicolor, overseas investors — both from the US and Middle East —  are widely spearheading dealmaking activity for production houses as they look to snap up Europe’s premium content providers.

Mediawan was also reported to be a logical takeover candidate US production houses including North Road, the production vehicle co-controlled by Hollywood veteran Peter Chernin, Blackstone’s [NYSE:BX] Candle Media.

RedBird IMI is a name to watch. As well as buying All3Media, it is selling Telegraph Media Group following regulatory scrutiny. It was also reported to be a buyer for ITV, although if this happened, any deal would face intense scrutiny from the UK authorities.

With production houses looking to scale up and win over the streaming platforms, dealmakers will be feasting their eyes on a slate on consolidation to come.