Australian M&A Outlook 2023: Technology, Media and Telecommunications Industry Insights

After the post-COVID media resurgence in 2022, this year has seen growth in advertising expenditure despite advertisers facing a tough macro environment. Major advertisers and brands have continued to invest to ensure they remain part of the consumer’s journey in the ‘new normal’. We’re now in FY24: In FY23, forecasts for total advertising expenditure was expected to slowdown in YOY growth to 3-4% (following a strong market rebound in 2022 of ~8% growth). The resurgence has not been split equally, and the big winners are digital social platforms, out-of-home digital networks, radio, and cinema. We expect traditional media players to pursue scale and support back-office savings. There’s also the potential for PE to scale up more attractive segments, such as out-of-home networks and radio.

Subscription services continue to gain viewing share. Local standouts are Kayo and Stan, thanks to a growing preference for direct-to-consumer models, and increased testing of new ad-funded models (including testing by Netflix). As these models mature, and as cost-of-living pressures rise further, there’s the potential for customer churn as households switch to a smaller set of ongoing preferred services. This should force a shake-up among key players, creating opportunities for significant commercial and equity partnerships around content catalogues, best-of-breed platforms, and customer experience models.

Global social platforms still consume the most media spend, however, the shine has come off international players. This is due to a combination of antitrust, data privacy changes, and the elimination of cookies, and it will impact less effective content engagement platforms (e.g. Snap). It also creates deal opportunities for less regulated mediums that have roll-up and/or scale-up potential (e.g. influencer marketing, sport networks, and codes for loyalty platforms). Expect ramifications for the local market, too.