Activist Investors Get Media-Unfriendly by Activist Insight

Shareholder activism has grown sharply at companies in media and content industries, more than doubling since 2013. A total of 27 media companies globally were publicly subjected to demands from activist investors in 2015, up from 22 in 2014 and 13 in 2013.

The data, for an upcoming feature in Activism Monthly Premium, suggest activists are having another run at a sector where they have previously been frustrated by dual stock classes, powerful company founders and a tendency to favor expensive new projects over cost-cutting drives.

Activist investors note market had been harsh to media companies

Several activist investors interviewed for the piece noted that the market had been especially harsh to media companies since last summer’s sell-off, and that valuations were now placing more targets in their sights. The likes of Viacom, Time Warner and Gannett have been subjected to the attentions of activists in recent years, as well as long-running campaigns at Netflix and Lions Gate Entertainment.

Indeed, the number of media companies publicly subjected to demands by activist investors grew 23% between 2014 and 2015, while the total number of companies targeted globally grew 15%.

Year Media companies subjected to activist demands
2010 3
2011 6
2012 15
2013 13
2014 22
2015 27
2016* 8

*YTD as of 16/03/2016

Yahoo, the internet company where Starboard Value on Thursday said it would nominate a full slate of directors, belongs to one of the most-targeted industries, with seven companies targeted in 2014 and nine in 2015. So far this year, however, diversified entertainment companies are the most popular targets, accounting for half of the total.

Type of company 2014 2015 2016*
CATV 4 3 1
Entertainment diversified 3 6 4
Internet info providers 7 9 2
Personal services 2 3 1
Music and video stores 1 1 0
Cinemas/Movie production 2 2 0
Broadcasting 3 3 0
Total 22 27 8

*YTD as of 16/03/2016

While attempting to change the composition of boards unsurprisingly accounts for the largest share of activist demands, there is a notably high level of governance activism at media companies, especially compared to global averages. Big remuneration packages, defensive bylaws and entrenched executives likely account for this focus, although it is notable that ValueAct Capital Partners has worked within the constraints of a family-controlled, dual class share structure company at Twenty-First Century Fox.

Other strategies include pushing for more capital to be returned to shareholders and greater M&A, likely taking advantage of consolidation within the space.

Activist tactics Media companies Global average
Board Related Activism 37% 49%
M&A Activism 19% 19%
Other Governance 18% 10%
Business Strategy 9% 8%
Balance Sheet Activism 8% 11%
Other 5% 1%
Remuneration 5% 3%

(The above table contains global data from 2010-2016 YTD).

For more information or if you have queries about the data, please contact Josh Black using the above details.

About Activist Insight

Since 2012, Activist Insight has provided its diverse range of clients with the most comprehensive information on activist investing worldwide. Regularly quoted in the financial press, Activist Insight is the trusted source for data in this ever-evolving space. Activist Insight offers two great products: Activist Insight Online and Activism Monthly Premium magazine, and counts many of the world’s leading investment banks, law firms, shareholder communications firms and institutional investors as its clients.