DirecTV and Sony Pictures could also be on the move in 2021
It’s time to look ahead at a few potential tech and entertainment M&A targets for 2021.
Could AMC, after a horrendous year for the cinema industry, still attract a buyer like Amazon’s attention? Is 2021 the year Apple decides to use its massive cash hoard to gobble up a film studio (like Sony Pictures) and accelerate its Hollywood push? Those are real possibilities, among several other buyout targets, as 2021 kicks off.
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Here’s our full list of 10 companies to keep an eye on this year as potential acquisitions.
1. AMC Entertainment — The nation’s largest theater chain is on life support right now. The pandemic has crippled the cinema business, and AMC, in particular, is feeling the pain, with the company warning investors it could run out of cash by early 2021.
After seeing its share price drop 70% this year, AMC is now worth less than $350 million. Amazon was rumored to be looking at a potential AMC acquisition last year, and that could still be an option moving forward. The tech giant would grab more than 1,000 theaters in the deal, but also billions of dollars in debt in the process. With multiple vaccines rolling out, coupled with the relative success of “Wonder Woman 1984” in theaters over the Christmas weekend, things could be finally looking up for decimated theater chains — making AMC more attractive than it was even six months ago, when the Amazon rumors were floating around.
2. DirecTV — AT&T appears ready to throw in the towel on its linchpin Pay TV service. The company last summer lost about another 600,000 “premium” TV customers, a category that includes DirecTV, and that actually marked an improvement on its recent performance.
DirecTV had been losing upwards of 700,000 each quarter since Q1 2019, and AT&T is now down to 17.1 million premium customers — or about 8 million less than they had in 2017. With cord-cutting in full effect, it’s hard to picture who would want to take on DirecTV. Perhaps rival Dish Network could be the best bet to acquire DirecTV’s assets from AT&T and still find a way to make it work, considering Dish has done a better job in recent years of keeping its customers tied to their accounts.
3. Roku — Roku has emerged from a crowded field to become the go-to streaming device maker for millions of Americans — as well as streamers outside the States. The company has had a banner year in 2020, as the coronavirus pandemic has accelerated the streaming revolution and helped Roku’s share price increase 163% on the year. That may have hurt its chances as a prime acquisition target, however, with the company now valued at $43 billion.
Still, deep-pocketed rivals like Apple, which competes against Roku with Apple TV, could be willing to pony up big bucks to bring Roku into the fold. The same goes for Google and Amazon, two other tech giants who are serious about the streaming device space. The thought process in this case would be, if you can’t beat ‘em, acquire ‘em.
4. Peloton — Alright, this admittedly fits loosely under the tech and media sphere. But similar to Roku, the pandemic has helped spur widespread adoption of Peloton’s at-home exercise bikes and classes. Also, similarly to Roku, its valuation of near-$45 billion would make it a harder company to absorb than at the beginning of 2020. But Peloton operates in a space — fitness — that Apple has increasingly focused on in recent years. A bid in 2021 would cost a pretty penny, but Apple, sitting on $192 billion in cash, is one suitor that makes sense from both a fit and a financial standpoint.
5. iHeartMedia – Forget the streaming wars, 2020 was the year of the podcast wars, with Spotify and Amazon both paying big bucks to acquire companies and exclusive shows. Still, even after Amazon grabbed Wondery, the podcast network behind shows like “Dirty John,” at the close of 2020, there are still a couple big fish worth going after.
That’s where iHeartMedia could come into play; iHeartMedia boasts it’s the No. 1 commercial podcasting company on the planet, but the company’s transition into podcasting has also come as its stock price has plunged over the last five years. Valued at about $910 million, iHeartMedia could be a prime target for Spotify or Amazon in 2021, as both have been angling to become the default podcasting platform for the ’20s.
6. Upwork — This one could have Facebook written all over it. Upwork is a platform that connects freelancers with short-term jobs, and its seen its popularity rocket higher during the pandemic. Still, despite seeing its share price triple in 2020, Upwork is still hovering near a $4.3 billion valuation. In other words, a deal wouldn’t necessarily break the bank for potential suitors, and Facebook could be a good fit. The tech giant has moved into the recruiting space in recent years, and adding Upwork to the fold could turbo-charge its efforts to become the go-to spot for jobs not suitable for LinkedIn.
7. Sony Pictures –For the last few years, Sony Pictures has been considered a potential buyout target for Apple. One reason? Proximity, with both companies sitting right next to each other in Culver City. It goes beyond that, though. Apple is continuing to beef up its production slate as it moves further into the entertainment world with Apple TV+. To truly compete with the big boys, though, some analysts believe Apple must pull the trigger if Sony is available.
“We believe Apple needs to acquire a studio to catalyze its content efforts,” Wedbush analyst Dan Ives told TheWrap, before pointing to Sony Pictures, A24 and Lionsgate as top targets. “This remains a key area that Cupertino needs to build out and we believe its through M&A.”
8. FuboTV — The sports-focused streaming service, which is on the verge of hitting 500,000 subscribers, could be an intriguing target in 2021. It closed 2020 worth about $1.9 billion, and its operating in a competitive space against rivals — chiefly Hulu with Live TV and YouTube TV — with two very-rich parent companies. FuboTV may be inclined to stay independent, considering it just purchased Balto Sports, a company that develops fantasy sports and betting tools, as the online sports betting market continues to heat up. But investors, after dealing with the whiplash of seeing its stock run from $3 to $62, back to $28, in the last two months, may be inclined themselves to take a good deal if it presents itself in 2021.
9. OnlyFans — This one should have plenty of suitors. Keyword: should. OnlyFans is a subscription service platform that allows creators to share pictures and videos with their followers in exchange for money.
As Bloomberg recently reported, the platform now has 85 million users, 1 million creators and was set to bring in $2 billion in 2020. Those are impressive figures, no matter how you slice it. But the one hangup for OnlyFans could be that it’s primarily known for being a platform adult models and porn stars use to reach their fans. That could scare away more conservative bidders, even if it would make sense for a handful of social media companies to bring OnlyFans into the fold. A buyer could not only get its hands on OnlyFans’ steady stream of monthly sales, but also a deeper insight into what fans are interested in — allowing them to integrate targeted ads, potentially.
10. Tidal – The struggling music streaming service is a distant challenger to powerhouses like Spotify and Apple Music. Jay-Z, who bought tidal for $56 million in 2016, appears open to offloading Tidal, with reports he’s been talking to Twitter CEO Jack Dorsey about a potential deal. But it wouldn’t be Twitter acquiring Tidal — it would Square, the other multi-billion dollar corporation Dorsey runs. How that would work is a bit murky; Twitter seems like a better natural fit if one of Dorsey’s two companies were to take over Tidal. At minimum, Jay-Z’s conversations with Dorsey indicate he’s open to moving out of the music streaming space.