Entertainment M&A is accelerating as investors chase quality IP
Christopher Allen, Head of Corporate at Rosenblatt Law
Despite continuing economic headwinds, the first half of 2026 has seen burgeoning activity in the entertainment sector across the value spectrum. Standout transactions this year include: Fox’s acquisition of Roku; EA’s take-private by PIF, Silver Lake and Affinity Partners; Paramount’s acquisition of Warner Bros; BMG and Concord’s mega merger; Virgin Music Group's acquisition of Downtown Music Holdings; and most recently Sky's acquisition of ITV Media and Entertainment.
Why all the activity? Several factors are driving momentum. Financing conditions have stabilised, covenant-lite loans are still available, while borrowing costs are easing. In these conditions, quality intellectual property (IP) is valuable and highly sought after by private capital and trade buyers.
Quality IP tends to comprise assets with established rights, a strong audience following, repeat engagement, and the potential for further expansion and monetisation, such as across new geographic markets and the potential for transmedia opportunities. However, building this kind of IP organically – particularly with a proven audience base - is difficult, which helps explain the continued focus on acquisitions as a route to scale.
Acquiring that IP is rarely straightforward, however — whether because underlying rights have been fragmented (making chain-of-title diligence burdensome and time-consuming), regulatory hurdles apply, or issues arise around creative control and emerging digital and immersive rights. In some cases, it therefore makes more sense to share risk through joint ventures and co-productions. Even where high-quality IP is secured, valuation remains challenging where future revenues are uncertain. In these cases, pricing is often bridged or supplemented by earn-outs and other performance-based mechanisms, which in turn introduce additional complexity and potential for dispute, particularly around calculations, timing of payments, security and tax treatment.
Streaming is a good example of the shift toward quality over scale, as in recent years the market has moved away from subscriber growth, towards profitability and better use of rights. Buyers are targeting specialist streaming services, regional content libraries and other media assets that can deepen engagement without adding too much fixed cost.
In gaming, mobile formats, cross-platform play, live operations and in-game economies are attractive because revenue is often linked to repeat use. But value is also linked to the underlying IP, rights, data, platform access and commercial arrangements relating to the game. Alongside assessing the IP itself, buyers must also understand software provenance, open-source usage, platform terms, live-service models, virtual goods and user-generated content.
A key commercial arrangement is likely to be the publisher agreement, which a buyer will scrutinise carefully to understand key areas such as revenue-sharing and recoupment, the extent of licensing permissions and sequel rights.
Children’s IP is another area attracting strong buyer interest. Well-known children’s brands tend to go hand-in-hand with transmedia exploitation more generally, generating revenue through content, licensing, merchandise, publishing, gaming and live experiences. This breadth of exploitation can sometimes make diligence more difficult, particularly where rights have been licensed, assigned, or shared across different territories and/or platforms and over many years. Understanding ownership of the IP and the related rights is, therefore, key to any entertainment transaction.
Artificial intelligence (AI) is increasingly linked to this analysis, where the use of digital replicas, voice models, name, image and likeness rights, and new digital works based on existing works are raising increasingly difficult questions around ownership, consent, infringement and monetisation. Importantly, there remains no settled global legal framework, which is unlikely to be forthcoming anytime soon, as the global superpowers remain in a race to establish a leading position with the technology. Therefore, these issues must be considered on a country-by-country basis by reference to IP laws written for traditional forms of work produced in the 20th century.
It will be interesting to see the degree to which AI impacts the entertainment sector. AI is particularly topical in the music sector. For example, Eddie Dalton, an entirely synthetic artist and blues/soul singer created by producer Dallas Little, reached No. 1 on the US iTunes singles chart this year, and Spotify has received criticism for putting AI artists on its platform. These illustrate both the commercial potential of AI-generated entertainment and the pressure it places on existing rights structures. Record labels have a fight on their hands to ensure that artists, songwriters, the record labels themselves and other rightsholders are still being paid wherever and whenever their works are used by, or in the training of, AI models. It is perhaps of little surprise that Warner Music Group recently acquired Sureel AI - a technology startup that develops rights management to protect its catalogue and artists' names, images, likenesses, and voices from unauthorised AI use - for this very purpose.
Taken together, these dynamics show why entertainment transactions are rarely straightforward. Deal complexity can affect valuation, conditionality, post-completion protections and integration, while regulatory risks -antitrust and national security - must also be assessed early on and factored into the overall transaction timetable, especially where cross-border transactions trigger approvals or filings in multiple jurisdictions.
Nevertheless, it is clear that deal activity is building again. Demand for quality IP, strong brands, engaged audiences, and innovative methods of exploitation remains highly attractive to buyers. Successful transactions are those where parties identify the rights, regulatory and commercial issues early, price them properly and build sufficient protection into the deal structure.
Written for Solicitor Journal