While 2017 was already plenty deal-filled for the media and semiconductor industries, this year's M&A activity in both sectors could well eclipse that of last year's, according to several industry execs at the Consumer Electronics Show this year.
"We think it's the golden age of mergers and acquisitions," claimed Aryeh Boukoff, the CEO of boutique investment bank LionTree on a panel about the future of video on Thursday, Jan. 11. Boukoff, not quite an impartial observer here, argued that smaller media firms lacking scale "will need to find a dance partner," either striking horizontal deals with other media firms (think Disney (DIS) /Fox (FOXA) or vertical deals with major content distributors (think AT&T (T) /Time Warner (TWX) .
Robert Kyncl, chief business officer for Alphabet's (GOOGL) YouTube who was on the same panel, concurred. He argued that the desire for more audience scale, greater content aggregation and cost efficiencies will all lead more firms to join forces. And Charles King, head of video-production firm Macro, argued that smaller players with unique content will have plenty of opportunities.
A+E Networks CEO Nancy Dubuc agreed that 2018 will be a big M&A year for media, but added there's "not much left" to buy. She also suggested that media players that have strong brands and avoid trying to be everything to everyone don't necessarily need to go the M&A route. "It's knowing who you're serving, it's over-serving them and it's about being an incredible steward of brand," she said. "Know thy audience and over-serve them."
Just a few days after the CES panel discussion, Viacom (VIA) shares popped on a report that vice chairwoman Shari Redstone wants to reunite Viacom with CBS CBS.
Separately, during an interview with the The Deal held at CES, Cypress Semiconductor (CY) CEO Hassane El-Khoury and CFO Thad Trent argued that chip industry consolidation still has a ways to go. The pair noted that Cypress, which carried out a "merger of equals" with Spansion in 2015 and bought Broadcom's (AVGO) IoT connectivity chip business for $550 million in 2016, is ready to participate if the right deal presents itself.
"In general, I don't think we're done...this is just starting," said El-Khoury about the consolidation wave that the industry has led to dozens of firms being snapped up since 2013. "I think there's going to be less companies over the next five years."
Though there were some big chip deals in 2017 -- for example, Intel's INTC $15 billion purchase of Mobileye and (towards year's end) Marvell's (MRVL) $6 billion deal to buy Cavium (CAVM) -- the pace did slow down relative to 2016. Broadcom, of course, made an unsolicited bid for Qualcomm (QCOM) in November, and is aiming to fully replace Qualcomm's board at the company's annual meeting in March. Cypress itself has been the subject of speculation that it could be acquired, particularly since micro controller (MCU) peers such as Freescale, Atmel and (in a pending deal) NXP (NXPI) have been snapped up.
Regarding the dearth of recent media reports about chip M&A deals, El-Khoury argued that the presence of Chinese bidders in some of them led deal talks to become public for a while, but the disappearance of those bidders (due to political opposition) has changed this dynamic. Trent, for his part, argued that the fact many firms were "digesting" acquired assets led to a pause in M&A activity in 2017.
Going forward, Trent thinks the fact that acquiring firms have obtained chip assets in deals that they don't consider to be strategic will spark additional activity -- many think Broadcom will unload some Qualcomm assets should its bid for the company succeed. He also declared that "the bar for [industry] scale continues rising," creating more pressure for chipmakers to join forces. "2018 will be active," he predicted.
As for Cypress in particular, El-Khoury and Trent both indicated that Cypress, which only had about $1.1 billion in net debt as of September, is ready to make a fresh acquisition should the right deal come along. Said Trent: "[E]ven though we were sitting on the sidelines [in 2017] we've been actively evaluating targets continuously, and we always do."
Editor's note: This article was originally published by The Deal, a sister publication of TheStreet that offers sophisticated insight and analysis on all types of deals, from inception to integration. Click here for a free trial.
More of What's Trending on TheStreet: