In the first half of 2020, there were 259 deals, a decline of 19% from the second half of 2019. While COVID-19 undeniably had an impact on the Media & Telecom sector, deal volumes had begun to contract in 2019, with the first half of 2020 broadly keeping pace with Q4-19. While sub-sectors reliant on advertising revenues felt the impact more sharply, telecommunications and digitally-focused sub-sectors were more resilient in the current environment.
Announced deal volumes have always been volatile in the sector (largely driven by megadeals) and 2020 is no exception. Announced deal values of $12B and $19B in Q1 and Q2, respectively, fell within the range of the last 8 quarters.
Advertising through a recession: Ad agencies are among the hardest hit by COVID-19 in the Media & Telecom sector, with most advertisers pulling back on their spend as a reflex to lockdowns.
As the economy starts to push on in the face of COVID-19, PwC expects advertising budgets to be slashed and certain sectors to pull back significantly on their spend (e.g. travel or live events). Some advertisers are likely to seek more effective demand generating spend on digital platforms as opposed to mass brand advertising on traditional media. PwC has already seen a sharp decline in advertising deals in Q2 2020, and expect this trend to continue in the near future. Going forward, they expect the bigger players will do a lower volume of deals, but will continue to compete for bigger data-driven assets
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