A frenzy of dealmaking is reshaping the face of digital media, as media corporates back mega-deals, mergers, and M&A in the space.

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The emergence of internet-enabled distribution channels, especially social media and search engines, has upended traditional models of news dissemination and challenged long-established media outlets to seek alternative revenue sources.

Companies such as The New York Times, Walt Disney, Fox, and Comcast/NBCUniversal are looking to startups such as BuzzFeed, Vice, Refinery29, and others for new models of engaging audiences.

As they navigate this world, media conglomerates have been either directly investing in or outright acquiring their younger competitors. This wave of consolidation in digital media parallels consolidation in the larger media business, as mergers—like the potential Gannett and Tronc combination reported in October 2016—reshape the industry.

Below, we used CB Insights data to study where large media companies have been allocating resources in recent years.

This post is an update of an earlier 2015 analysis of large media companies investing in startups. Click here to read it.

We identified 21 media companies that have been the most active investors in private markets in recent years, and used CB Insights tools to analyze their activity. We included companies heavily involved in distribution but excluded Hollywood studios. Many of the companies below have been the target of acquisitions, or were spun off from parent companies at some point in the period under study. They are marked with an asterisk.

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These corporates are:

The Washington Post Hearst Corporation/Hearst Ventures Bertelsmann/Bertelsmann Digital Media Investments Axel Springer/Axel Springer Digital Ventures Time Warner Cable/Time Warner Investments AOL/AOL Ventures* The Walt Disney Company/Disney Accelerator News Corp Comcast/Comcast Ventures Discovery Communications Sky TV and Sky Broadband Verizon/Verizon Ventures The E.W. Scripps Company The McClatchy Company Gannett* tronc/Tribune Digital Ventures* Viacom NBCUniversal* Fox Broadcasting A&E Television Networks The New York Times Company

The visualization of their investment activity below was created using CB Insights’ Business Social Graph, which can show how top investors and target companies in any industry are interrelated. Click on the image to enlarge.

Key takeaways from the social graph include:

Rather than staying in their lane, many of these media corporates are adopting a fairly industry-agnostic investment strategy. The McClatchy Company, a California-based newspaper publisher, paired up with other news publishers, including Gannett and Tronc (which was spun off from another newspaper-centric company Tribune Media), to co-invest in a Series A round to Moonlighting. Moonlighting is an online freelancer marketplace. Further, the Times recently acquired social media marketing company HelloSociety and virtual/augmented reality design agency Fake Love. Virtual reality startups have been popular among media giants. The New York Times, Bertelsmann Digital Media Investments, the Disney Accelerator, AOL, Verizon Ventures, A&E Television Networks, and Comcast Ventures all have invested in virtual or augmented reality startups. Acquisitions and investments in startups by the 21 large media companies in the list above are on pace for new annual highs this year. At the current run rate, these investors will break 130 private market deals and almost $4.5B worth of financing this year. Recent examples of investments and M&A include:

Vessel: Late in October 2016, it was announced that Verizon would acquire digital video content company Vessel and shut it down in what appears to be a bid to acquire talent. The deal is not shown in the graph below, which covers the period to 10/26/16.

Late in October 2016, it was announced that Verizon would acquire digital video content company Vessel and shut it down in what appears to be a bid to acquire talent. The deal is not shown in the graph below, which covers the period to 10/26/16. Wirecutter : Earlier the same month, in a move to bolster their digital foothold, The New York Times acquired product recommendation site The Wirecutter.

: Earlier the same month, in a move to bolster their digital foothold, The New York Times acquired product recommendation site The Wirecutter. BuzzFeed: Also in October 2016, NBCUniversal took a corporate minority share in BuzzFeed for $200M. It was the second investment of this size that the media giant had made in BuzzFeed.

Also in October 2016, NBCUniversal took a corporate minority share in BuzzFeed for $200M. It was the second investment of this size that the media giant had made in BuzzFeed. Group Nine Media: Also in the same busy month, it was announced that digital media companies Thrillist Media Group, NowThis Media, and The Dodo would be merging with Seeker, a division of Discovery Communications, to form Group Nine Media. As part of the deal, Discovery invested $100M in Group Nine.

Also in the same busy month, it was announced that digital media companies Thrillist Media Group, NowThis Media, and The Dodo would be merging with Seeker, a division of Discovery Communications, to form Group Nine Media. As part of the deal, Discovery invested $100M in Group Nine. Defy Media: Also of note, in September 2016, Wellington Management funded a $70M Series B to the YouTube-centric video content producer Defy Media. Viacom was an investor in the company’s Series A back in 2014.

Also of note, in September 2016, Wellington Management funded a $70M Series B to the YouTube-centric video content producer Defy Media. Viacom was an investor in the company’s Series A back in 2014. theSkimm: The New York Times participated in theSkimm’s $500K Series B-II. theSkimm is a daily newsletter that summarizes top news stories of the day.

The New York Times participated in theSkimm’s $500K Series B-II. theSkimm is a daily newsletter that summarizes top news stories of the day. Inverse: Bertelsmann Digital Media Investments, the investment arm of international media company Bertelsmann, participated in a Series A round to the millennial male-focused online news company Inverse.

Deals, dollars, and M&A trends

At the current run rate, this year’s deal count from the most active media corporates in private markets (the 21 listed above) is on track to surpass 130 deals, a 20% increase over 2015. Propped up by Walt Disney Co’s $1B corporate minority deal to BAMTech, a provider of direct-to-consumer streaming services, funding from these deals in 2016 is on pace to reach a new high of $4.5B.

Other large deals this year include NBCUniversal’s $200M corporate minority stake in BuzzFeed (previously mentioned) and Time Warner Cable’s $580M investment into Hulu.

Year-to-date, there have been 25 exits via corporate majority or acquisition by the large media companies listed above, up over 100% compared to last year, which saw a dip in such activity. In April, AOL acquired virtual reality production studio RYOT. Founded in 2012, RYOT shoots films and documentaries in VR. In June, Hearst Corporation acquired a corporate majority stake in MedHOK, a platform used to ensure healthcare payer regulatory compliance.

Top 20 most active media corporates

The top 8 investors are all media or media/telecom companies with corporate venture arms. Comcast/Comcast Ventures is by far the most active investor in media, having participated in deals to over 90 different companies since 2012. In 2nd and 3rd are Bertelsmann/Bertelsmann Digital Media Investments and Verizon/Verizon Ventures.

Following the media companies with corporate venture arms, the next most active media corporates are The New York Times and Discovery Communications with 10 investments each.

MOST ACTIVE MEDIA INDUSTRY CORPORATE INVESTORS IN PRIVATE COMPANIES Rank Investor 1 Comcast/Comcast Ventures 2 Bertelsmann/Bertelsmann Digital Media Investments 3 Verizon/Verizon Ventures 4 The Walt Disney Company/Disney Accelerator 5 Hearst Corporation/Hearst Ventures 6 Time Warner Cable/Time Warner Investments 7 Axel Springer/Axel Springer Digital Investments 8 AOL/AOL Ventures 9 The New York Times Company 9 Discovery Communications 11 NBC Universal 11 Gannett 13 News Corp 13 Tronc/Tribune Digital Ventures 15 The McClatchy Company 15 The Washington Post Company 17 Viacom 17 A&E Television Networks 19 The E.W. Scripps Company 20 Fox Broadcasting

Media corporate venture capital

Looking solely at the corporate venture capital arms of traditional media companies, we observe a few differences since our 2013-2015 report. This includes greater collaboration among media VCs and more willingness to invest in companies taking nontraditional approaches to the media.

1. Updates since our last report:

There have been 6 deals with multiple media corporate investors. This includes NextVR, which is developing a virtual reality platform to broadcast live events, and was backed by Time Warner Investments and Comcast Ventures. In our last report on the topic, only 2 companies received investment from more than 1 media investor, Fanduel and recently acquired Epoxy. Others receiving investments from multiple media venture investors include Mashable, funded by Time Warner Investments and Tribune Digital Ventures, and Spectrm, whose seed round was backed by Axel Springer Digital Ventures and Bertelsmann Digital Media Investments.

Tonic Solutions, a medical data collection company and one of the only life science deals within the group, was once only backed by Hearst Ventures and is now supported by both Hearst and AOL Ventures.

2. Comcast Ventures is by far the most active corporate investment arm among the group, having invested in over 70 companies since 2014. Following Comcast Ventures are Bertelsmann Digital Media Investments, Verizon Ventures, and Hearst Ventures, all with 33 deals or fewer.

Case Study: Group Nine Media

In parallel with the overall trend of large news outlets reaching out to startups, these smaller companies are deciding to grow via mergers in order to compete. On October 11, 2016 it was announced that digital media companies Thrillist Media Group, NowThis Media, and The Dodo would be merging with Seeker, a division of Discovery Communications. Discovery invested $100M in the newly formed company, Group Nine Media, as part of the deal.

Other media corporates had previously invested in one or more of the above companies including NBCUniversal, German media conglomerate Axel Springer, and Sportsrocket. NowThis Media was the most-well funded of the group, with a total of $32M, followed by The Dodo with $18M and Thrillist with $15M. The only VC to have invested in all three was NYC-based Lerer Hippeau Ventures. Thrillist’s CEO Ben Lerer is also a managing partner at LHV.

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