Hopes for a robust resurgence in digital media mergers and acquisitions (M&A) during the first half of 2025 were dampened by market instability and high interest rates. Despite initial optimism, the sector experienced a slowdown.

Data from JEGI Clarity indicates a decrease in overall deal volume within the media sector, with a 15% drop in the U.S. and a 33% drop in Europe compared to the same period in 2024. The previous year was already considered below average.

“Every month this year has been lighter than last year,” said Robert Berstein, managing director at JEGI Clarity. “And we already thought last year was light.”

Several experts attribute this downturn to macroeconomic instability, particularly challenges within debt markets.

“If you are a major PE player, you are using a combination of equity, cash, and debt to get deals done,” said Mark Wright, head of M&A at Prohaska Consulting.”And the first half has been volatile, with relatively high interest rates.”

This financial habitat led potential buyers to hesitate, even with increasing pressure to consolidate within the fragmented digital media landscape.

“Digital media remains a highly fragmented industry,” Wright said. “There is massive pressure to simplify the ecosystem. Agencies want fewer players, and sellers want fewer buyers. That has not happened to the extent people expected.”

These economic challenges, combined with the potential for technological disruption, have hindered M&A activity. While some express cautious optimism for the latter half of the year, only the most valuable assets are assured a accomplished sale.

Deal Structures and Vertical Focus in the First Half of 2025

Deals that did proceed often involved minimal upfront cash and significant performance-based components, according to Blake Saunders, managing director at Methesulah Advisors.

“Buyers are paying very little cash,” Saunders said.”They’re focused on brand equity, traffic, and monetization potential-especially in verticals that are insulated from ad-market volatility.”

Ziff Davis picked up TheSkimm to enhance its newsletter-driven revenue in the health and finance sectors. Redbrick acquired Quartz and the Inventory to broaden its affiliate commerce offerings. Other acquisitions focused on leaders in sports (MaxPreps), dating (HER), fitness (Breakaway), and personalized content (Wonderbly).

These companies demonstrate resilience to advertising volatility and platform changes, as buyers prioritize direct audience access and consistent engagement.

“Vertically focused,monetization-ready platforms are driving digital media dealmaking,” according to a JEGI Clarity report published in June.

Large-scale consolidations were notably absent, with activity primarily involving carve-outs, asset sales, and ongoing portfolio adjustments by both strategic buyers and private equity firms.

Holding companies are increasingly streamlining their portfolios to maximize returns, according to berstein.

“There’s a sense that if you’re not all-in on a category, the reward doesn’t justify the complexity,” Bernstein said.

Similarly, digital media companies are divesting underperforming brands-frequently enough those with lower EBITDA-to concentrate on higher-margin assets.

“for these firms, it’s about reconcentrating their resources,” Saunders said.

“Digital media remains a highly fragmented industry… Agencies want fewer players, and sellers want fewer buyers.” – Mark Wright

The Dual Impact of AI

Artificial intelligence is not only transforming media workflows but also influencing M&A considerations. Buyers are evaluating whether potential acquisitions are vulnerable to, or enhanced by, automation, according to Jeff Kaloski, a managing director and partner at L.E.K. Consulting.

“A lot of the sell-side work we’re doing is focused on how insulated a business is from the disruptions being posed by AI,” Kaloski said.”You need a story around how AI can be a tailwind.”

Rather than being solely a hindrance, AI’s ability to streamline media operations and improve efficiency could make companies more attractive acquisition targets, according to Wright.

“if AI fully takes hold, you’ll see far greater execution efficiency,” Wright said. “Margins improve, and for acquirers, that’s appealing-even if it comes with broader industry disruption.”

Anticipating a Rebound

Despite the sluggish start, dealmakers are cautiously optimistic that activity could increase in the second half of the year, provided economic conditions stabilize.

“There’s a flood of people saying, ‘it’s june-if I want to go out this year, I need to move now,'” Berstein said. “We could see a pickup before Labor Day.”

“The macroeconomic pressure to consolidate is still there-it increases by the month,” wright added.”If interest rates come down, and the stock market remains steady, you can expect an explosion of M&A in the back half of 2025.”