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Summary:

A new report from media investment bank Jordan, Edmiston Group pegs the total value of media M&A during the third quarter at $95 billion, up…

A new report from media investment bank Jordan, Edmiston Group pegs the total value of media M&A during the third quarter at $95 billion, up 110 percent from $45 billion in the same quarter last year. In terms of volume, online media saw the most activity, with 232 deals worth $8.3 billion — up from 136 deals worth $5.7 billion last year. Large deals in this sub-sector included R.H. Donnelley’s $345 million purchase of Business.com and Disney’s (NYSE: DIS) $350 million purchase of Club Penguin.

Database information services had a big quarter from a dollar perspective, hitting $22 billion, up from last year’s $1.5 billion, although this was mainly due to Thomson’s (NYSE: TOC) $18 billion acquisition of Reuters (NSDQ: RTRSY). Volume actually fell from 35 to 22 deals, year over year.

Not surprisingly, all of the interest surrounding ad networks prompted a lot of activity in marketing and interactive services, with 182 deals worth $27.6 billion, up 48 percent and 76.5 percent respectively over last year’s numbers.

Not all sectors saw strong M&A growth. Business-to-Business publishing deals fell to $3.1 billion, a 15.8 percent slip. Newspaper publishing deals dropped 54 percent, although News Corp.’s (NYSE: NWS) $5.6 billion planned buyout of Dow Jones (NYSE: DJ) pushed the dollar amount up by 37 percent. Private equity weakness contributed to the slowdown in traditional media deals that will likely persist if credit market conditions remain weak. Release (.pdf).

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  1. Here is the link (http://tinyurl.com/6wynvb) to the Peachtree Media Advisors, Inc. year-end report summarizing the M&A activity in the interactive and out-of-home media sectors in 2008.

    The highlights from online media M&A in 2008 are as follows:

    In 2008, there were 707 merger, acquisition and capital raise transactions in the online sector of media (92 more transactions than the 615 in 2007). The 707 online media deals were comprised of 348 capital raise transactions and 359 acquisitions.

    The $16.9 billion in reported deal value in 2008 represents a decrease of 62% from the $44.4 billion in reported M&A transaction value in 2007 for all of the U.S. online media sectors. The 2008 reported deal value by sector:
    o Consumer – $6.2 billion (36.7%);
    o Business – $4.8 billion (28.4%);
    o Mobile – $592 million (3.5%);
    o Enabling – $2.5 billion (14.6%); and
    o Commerce – $2.8 billion (16.7%).

    In 2008, $3.5 billion in reported deal value of venture capital flowed into all sectors of media, representing a 22% increase over the amount of reported $2.9 billion in capital raised in 2007. The Enabling category had the largest increase in the amount of capital raised attracting $892 million in 2008, which represents a 124% increase over the $398 million raised by the sector in 2007. The Mobile sector also saw significant gains in investment capital. The Mobile category raised $341 million in investment capital in 2008, representing a 488% increase over the $58 million raised by the sector in 2007.

     The top five sectors in terms of volume of transactions (not reported deal value) for equity raises in 2008 were as follows:
    o Video & Online Games – 59 capital raise transactions;
    o Social Networking – 57 capital raise transactions;
    o Web Applications/Enabling/IT – 47 capital raise transactions;
    o Mobile – 35 capital raise transactions; and
    o Blogging/User Generated – 27 capital raise transactions.

    Feel free to give me a call at anytime to discuss and have an excellent New Year!

    Best,

    John

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