Private equity and venture capital investments in movies and entertainment slumped to its lowest level in at least six years in 2023 due to several factors, including the shift to streaming, continued weak advertising and regulatory scrutiny, according to industry sources.
Transaction value totaled $2.77 billion, down 73.5% from the $10.46 billion announced in 2022, according to S&P Global Market Intelligence data. The number of deals declined to 142 from 190.
The shift to online streaming of movies is having an impact, said Wade Holden, senior research analyst at Market Intelligence.
"Private equity has long been a major source of financing for independent films, and with the changing distribution landscape as streaming becomes more dominant and other lines of revenue such as TV licensing decrease, it's becoming more and more difficult for smaller films to turn a profit," Holden said.
Aside from the evolving distribution landscape, Justin Nielson, Market Intelligence's principal analyst covering the US broadcast industry, also blamed the high interest rate environment, a weak advertising market and the termination of Standard General LP's acquisition of TV station operator Tegna Inc. amid regulatory hurdles.
"The actors' and writers' strike also had an impact on TV ad sales, but was less of a contributing factor, given that live sports viewership continued to grow and networks were able to fill the programming gaps with lower cost reality and syndicated programming," Nielson said.
The US and Canada received the bulk of private equity investments in 2023, with about $1.05 billion. Europe and Asia-Pacific followed with $773.9 million and $657.7 million, respectively.
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– Read about private equity investments in the movies and entertainment sector as of August 2023.
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In the fourth quarter of 2023, the movies and entertainment industry recorded $573.7 million in announced investments, against $580.7 million in 2022. The number of deals went up year over year to 36 from 31.
Top deals
In the largest private equity investment in movies and entertainment in 2023, PAG acquired Jiangsu, China-based cinema operator Changzhou Hengxuan Consulting Management Co. Ltd. for $317.8 million, according to Market Intelligence data.
Splack Participações SA's $265.2 million acquisition of a 90% stake Brazilian football club Coritiba Foot Ball Club em Recuperação Judicial came second.
Across the media industry, the interactive media and services sector received the bulk of private equity investments in 2023, with $21.3 billion, followed by the interactive home entertainment sector, with $3.0 billion.
