Record highs in media M&A; online media buoyant

01 November 2007

This is the estimate made by Jordan & Edmiston Group (JEGI), a consulting firm specialising in media M&A. As many as 637 transactions recorded by this firm aggregated a total value of over $95 billion in this period. For details, see: table below.

The M&A market for media and information companies in the most recent quarter was clouded by credit market disruption and concerns for a potential advertising and broader economic slowdown. While a large number of transactions were announced, the pace slackened and some notable previously announced deals stalled.

Despite this, M&A for the media and information industries scaled to record highs in the first three quarters of the year. As many as 637 transactions were announced totalling over $95 billion in value, as tracked by JEGI across 11 media and information sectors (see chart below). Deal value in the first nine months of 2007 has already far exceeded the records of full-year 2006.

The JEGI report says, "Once again, media and information M&A was dominated by an extraordinary number of transactions in two sectors - marketing services and online media, which together accounted for 414 transactions valued at $36 billion, or 65 per cent of total deals announced and 38 per cent of total deal value."

Big online deals
Online advertising is projected to reach nearly $22 billion in 2007, growing 28 per cent over 2006, according to research provided by eMarketer at a recent Online Publishers Association event, the JEGI report says. "The robust growth in Internet advertising spend has made online ad networks and technology providers attractive growth acquisitions, and a number of them changed hands in 2007, led by the $5.7 billion acquisition of aQuantive by Microsoft and the $3.1 billion announced acquisition of DoubleClick by Google, as well as Yahoo''s $300 million acquisition of Blue Lithium, and the $275 million purchase of Tacoda by AOL."

M&A activity for the online media segment continued its rapid pace during the first three quarters of 2007, with 232 transactions totalling over $8 billion in value, accounting for respective 71 per cent and 44 per cent increases over 2006. The third quarter saw 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.