Media and Information M&A Achieves Record Highs so Far in ’07

October 3, 2007

This article is included in these additional categories:

B2B | Business of Marketing | Financial Services | Magazines | Newspapers | Out-of-Home

In the first three quarters of 2007, the number of media and information industry M&A deals matched the number for all of 2006 – and deal value surpassed (by 64%) the $60.6 billion in full-year 2006 value, reports The Jordan, Edmiston Group, Inc. (JEGI), which tracks 11 media and information sectors.

The record high 637 transactions totaled more than $95 billion in value in the first three quarters of the year, JEGI said. 
 
In the most recent quarter, however, the M&A market for media and information companies was clouded by credit-market disruption and concerns for a potential advertising and broader economic slowdown, JEGI said. The pace slackened and some previously announced deals stalled, it said.

The marketing services and online media sectors dominated in the first three quarters, together accounting for 414 transactions valued at $36 billion – or 65% of all media and information deals and 38% of total deal value.

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The robust growth in Internet advertising spend has made online ad networks and technology providers attractive growth acquisitions, and several changed hands in 2007: the $5.7 billion acquisition of aQuantive by Microsoft, the $3.1 billion announced acquisition of DoubleClick by Google, Yahoo’s $300 million acquisition of Blue Lithium, and the $275 million purchase of Tacoda by AOL.

The following are M&A highlights, as reported by JEGI.

B2B  Magazines

  • Business-to-business magazine transactions in the first three quarters of 2007 were on par with those in the equivalent period of 2006, but deal value was 16% lower.
  • Only one multi-hundred-million-dollar transaction was completed in Q3 2007: Incisive Media’s $630 million acquisition of ALM from Wasserstein.
  • Whereas three $400+ million transactions took place in the third quarter of 2006.

Consumer Magazines

  • A total of 46 deals were completed through the first nine months of the year, up 24% over the equivalent period in 2006.
  • Deal value totaled $3.3 billion – up 82% compared with the first nine months of 2006.
  • Database Information Services
  • The sector was dominated by the $18+ billion acquisition of Reuters by Thomson.
  • Overall, there were fewer transactions, however: Deal activity fell 37% through the first three quarters.

Educational & Professional Publishing

  • Led by the sale of Harcourt Education for $4 billion to Houghton Mifflin in July, 3Q07 M&A activity for the educational and professional publishing sector far surpassed 2006 levels.
  • With the earlier $7.75 billion sale of Thomson Learning to Apax Partners, the number of deals through the first nine months of 2007nearly doubled and deal value rose exponentially, compared with the equivalent period in 2006.

Exhibitions & Conferences

The sector has remained healthy thus far into 2007, with 51 deals valued at $733 million, increaseing 46% and 15%, respectively, over 2006 levels.

Marketing & Interactive Services

  • The marketing and interactive services sector continued to thrive, as the number of deals increased 48% and deal value rose 76% in the first three quarters of 2007 vs. 2006.
  • Transactions of online ad networks surged as buyers reached for new growth (among the deals: JEGI’s arrangement of a $50 million investment for Gorilla Nation Media, the largest online advertising rep sales firm).

Newspaper Publishing

The confirmed $5.6 billion sale of Dow Jones to News Corporation in Q3 2007 was the M&A highlight for the newspaper sector, driving deal value up 37% for the first three quarters of the year.

Online Media

  • M&A activity for the online media sector continued its rapid pace during the first three quarters of 2007, with 232 transactions totaling over $8 billion in value, accounting for increases of 71% and 44%, respectively, over 2006.
  • Third-quarter highlights: the $345 million sale of Business.com to R.H. Donnelley, Club Penguin’s sale to Walt Disney for $350 million plus earn-out, and the sale of RealAge and UGO Networks to Hearst for undisclosed amounts.

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