Media, Information, Marketing Services M&A Deal Value Down Sharply in ‘08

Merger and acquisitions deal value in the first half of 2008 for media, information, marketing services and related technologies was down significantly, though the number of transactions was up slightly, reported the Jordan, Edmiston Group, Inc. (JEGI) - via MarketingCharts.

There were bright spots in several areas, especially in the Online Media & Technology and Marketing & Interactive Services sectors, as well as in sub-$1 billion transactions, JEGI sad.

The number of transactions in the first half of the year totaled 404, compared with 397 in the first half of 2007; deal value, however, was down dramatically to $23.2 billion from $65.8 billion in the same timeframe: seechart of M&A transactions and value for the first six months of the past 5 years.

The headline decline was in $1+ billion transactions - four in the first half of 2008 accounting for $9.6 billion in value, versus 11 deals worth $46.3 billion in the equivalent period last year, including Thomson’s $18 billion acquisition of Reuters. Viewtable of top 5 transactions, 1H07 and 1H08.

In contrast, there was continued strong confidence in the middle-market, which recorded a steady flow of M&A transactions, especially for high-quality growth businesses. In the first half of 2008, 400 deals under $1 billion were announced, compared with 386 in the first half of 2007 and 350 in the first half of 2006.

See table of M&A activity - transactions and values - by sector, 1H07 and 1H08.

The Online Media & Technology sector reported 146 announced transactions in the first half of 2008, while Marketing & Interactive Services had 144, both up 20+ percent over 2007 levels. The 290 transactions in these two sectors accounted for 72 percent of total deal volume in the first half of 2008.

M&A Highlights

• M&A activity in the first half of 2008 consisted of less than half the number of transactions for business-to-business magazines, compared with the first half of 2007. Deal value decreased 85 percent in 2008 from 2007 levels, as there was no transaction in this sector to offset VSS’s $1.1 billion acquisition of Advanstar in the first half of 2007.
• Consumer magazines also slowed significantly in the first half of 2008 in number of deals (down 38 percent) and value (down 82 percent), compared with the first half of 2007. In the first half of 2008, there were no transactions over $500 million in value, compared with Source Interlink’s $1.2 billion acquisition of Primedia’s Enthusiast Media group last year.
• The number of deals for the database and information services sector was up 29 percent in the first half of 2008. However, the first half of 2007 included Thomson’s $18+ billion acquisition of Reuters. Without this transaction, deal value for this sector would have nearly tripled in 2008 over 2007 levels.
• Half as many transactions occurred in the educational and professional publishing sector in the first half of 2008 versus the first half of 2007. However, total deal value was down considerably mainly due to the $7.75 billion acquisition of Thomson Learning by Apax Partners and Omers Capital Partners in the first half of 2007.
• M&A activity in exhibitions and conferences declined in both number of deals and value in the first half of 2008, compared with the first half of 2007, by 26 percent and 13 percent, respectively. Still, this sector continued to show vibrancy in the M&A market, and notable 2008 transactions included the sale of Clarion Events to VSS, and the sales of Gartner’s Vision Events and Think Service, Inc. to CMP (JEGI represented both sellers).
• The marketing and interactive services sector continued to show robust M&A activity through the first half of 2008, as the number of deals rose 24 percent over 2007 levels. Deal value could not match several multibillion-dollar transactions in the first half of 2007, including Microsoft’s $5.7 billion acquisition of aQuantive. Still, this sector continues to be vibrant with notable transactions in the second quarter, including the agreement to merge Taylor Nelson Sofres and GfK for $1.4 billion; Nielsen’s acquisition of IAG Research for $225 million; and the acquisition of M:Metrics by comScore for approximately $50 million.
• In the first half of 2008, M&A activity for newspaper publishing consisted of fewer deals completed on heavily reduced value. One notable transaction occurred in the second quarter: Tribune Company’s sale of Newsday to Cablevision for $650 million. By comparison, Tribune was sold for nearly $4 billion to Sam Zell in the first half of 2007.
• For the first half of the year, deal activity and value were up 22 percent and 40 percent respectively in the online media and technology sector. Total deal value was lifted by AOL’s acquisition of Bebo for $850 million; and the sale of CNET to CBS for $1.7 billion. The first half included a wave of transactions in the emerging social media space, such as the sale of Pluck to Demand Media, Comcast’s acquisition of Plaxo, and the sale of Prospero to Mzinga.