SEOUL -- The Asian media market's mergers and acquisitions boom will continue, despite the worldwide meltdown in credit and leveraged finance markets.
That's according to speakers at the Broadcast Worldwide convention and content market here last week. But they warned that content, contrary to popular opinion, was not king when it came to companies looking for investments.
The recent flurry of deals has been driven by consolidation, technology convergence and telco firms moving into the media.
Charles Huh, associate director at Standard Chartered Private Equity, told the confab he believes strategic investors will step up to the plate and buy media firms, taking over from the larger private equity companies hit by the credit squeeze.
Thomas Fallows, technology, media and telco managing director at Citibank's Global Corporate Bank Asia Pacific, says the meltdown made it practically impossible to go to Asia's capital markets. "But if you don't need to go global, there is still lots of liquidity (within Asia)," he adds.
For all the repetition of the phrase "content is king," both men agree that content owners and producers are less attractive to investors than other media firms.
"Cash flow is the investment, not content," Huh says. "The production infrastructure in Asia is not as good as in North America."
Smaller companies are a higher risk than large ones, according to Fallows, with the Asian content market as local or at best regional.
"Our focus is on distribution companies," he says, pointing to TV broadcasters and cablers as more attractive than producers.
Choi Dong Shik, a lawyer with law firm Kim & Chang, says stiff government regulation of South Korea's media made it difficult for startups to enter, which could encourage other entrants, such as telcos.
While speakers suggested similar regulations are stimulating takeovers in several other Asian territories, China is largely closed by government controls.
"All our clients are asking how to get into China, but it is the hardest market to crack," says Fallows. "China is missing an opportunity."
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