Mergers and acquisitions across the media and information industries continued at a strong pace in the first quarter despite a turbulent economic environment, with 202 transactions totaling $13.4 billion, across the 11 sectors tracked by The Jordan, Edmiston Group, Inc. (JEGI).
In total, deal value was up 5% from the first quarter of 2007 – a record-setting year – despite 2% fewer transactions, and was on par with the first quarter of 2006 and well ahead of first quarter 2005, JEGI said:
The record year of 2007 was driven in part by high deal volume in the Online Media and the Marketing & Interactive Services sectors, which were also active in 1Q08, combining for 143 transactions, compared with 119 in 1Q07, but deal volume declined to $5.4 billion from $6.4 billion.
AOL added to a string of pricey deals with an $850 million purchase of UK social networking site Bebo, while GSI Commerce acquired e-Dialog for $157 million. Looking ahead, Microsoft’s bid for Yahoo is likely to stimulate a new wave of consolidation and acquisition among large and mid-tier digital groups, according to JEGI.
M&A Highlights (ordered by Deal Value)
- The database information services sector recorded a large gain in deal volume and value in 1Q08 versus 1Q07. Some multibillion-dollar transactions boosted this sector for the quarter, including two announced transactions: the sale of Getty Images to Hellman and Friedman for $2.4 billion; and Reed Elsevier’s $4+ billion acquisition of ChoicePoint.
- The online media sector continued to be very active in the first quarter, for both the consumer and the B2B sectors. On the consumer side, AOL’s acquisition of Bebo for $850 million helped lift total deal value for online media 77% over the first quarter of 2007. (Strategic B2B media companies continue to invest in new media properties in their ongoing efforts to retool their businesses, including Questex Media’s acquisition of FierceMarkets and Pearson’s acquisition of Money-Media, both handled by JEGI.)
- Deal flow continued to be healthy in the first quarter of 2008 for the marketing & interactive services sector. The number of deals completed jumped 40% over 2007 levels, with few blockbusters but many more middlemarket transactions. (Several notable interactive transactions were completed in the quarter, including the recap of Undertone Networks with JMI Equity, the sale of a majority stake in Medical Knowledge Group to CIVC Partners, and the sales of e-Dialog to GSI Commerce, Compete to Taylor Nelson Sofres, and Rapt to Microsoft.)
- Exhibitions and conferences recorded fewer transactions in the first quarter of 2008, but significantly higher transaction value, led by VSS’s acquisition of Clarion Events from HG Capital for $234 million. (Other notable transactions for the quarter included JEGI’s sale of Gartner’s Vision Events to CMP and the sale of Becker Group to Viad.)
- 1Q08 recorded half the number of deals and value for business-to-business magazines, compared with the first quarter of 2007. (Many of the largest B2B media companies traded over the past few years, including Penton, Advanstar, ALM, Incisive Media, and Nielsen (formerly VNU), so a period dominated by restructuring and smaller tuck-in acquisitions is expected.)
- M&A activity for newspaper publishing recorded about one-third the deals completed in 1Q07, with sharply smaller transaction value. (Following several years of industry consolidation, including the acquisition of Tribune by Sam Zell and the sale and subsequent break-up of Knight-Ridder, there were no significant newspaper M&A transactions in the first quarter of 2008.)
- M&A activity in consumer magazines was very quiet in the first quarter of 2008, following a wave of consolidation in 2007, starting with Bonnier’s $200 million acquisition of Time’s properties in the first quarter, and then followed by the announced sales of Gemstar-TV Guide, Emap, Primedia’s Enthusiast group, and Dennis Publishing.
About JEGI: Based in New York, NY, JEGI is a provider of independent investment banking services for the media and information industries. In 1Q08 it completed a recap of online ad network Undertone Networks with JMI Equity, as well as the sale of a majority interest in Medical Knowledge Group to CIVC Partners, the sale of FierceMarkets to Questex Media, backed by Audax Group, and the sale of Money-Media to Pearson.
Other transactions completed by JEGI in 1Q08 included the sale of Hallmark Data Systems to EBSCO Industries, and Think Service to CMP (United Business Media). In the event market, JEGI sold Gartner’s Vision Events to CMP and Becker Group to Viad.