Digital Media Deals Up 68 Percent in First Half

The number of digital media deals exploded in the first half of 2010, up 68 percent to 564 while overall value for those deals jumped 117 percent to $9 billion, according to the "2010 Mid-Year Digital Media M&A Review" from Peachtree Media Advisors. In fact, the only category that showed a decline in the number of transactions in the first half of 2010 was Lead Generation and Customer Acquisition (down from eight deals in first half 2009 to seven), according to the report.

However, valuations on individual deals fell from 2009 to 2010. Only one category-Online B-to-B Content-managed to increase valuation multiples as a whole, thanks in large part to the $3.4 billion acquisition of Interactive Data Corporation by Silver Lake and Warburg Pincus.

Revenue valuations for Consumer, Advertising and Search companies fell from 3.2x to 2.9x. E-commerce companies saw some of the biggest drops, with revenue multiples falling from 3.5x to 2.0x and EBITDA multiples down 36 percent from 29.9x to 19.1x.

However, according to public market valuations, E-commerce retains the highest mean EBITDA multiples as a category, followed by Online B-to-B Content (15.6x), Interactive Marketing Services (13.9x), Consumer Advertising & Search (12x) and Diversified Media—which includes media companies such as McGraw-Hill and Time Warner—at 6.4x. Hearst's $325 million acquisition of online agency iCrossing in June remains one of the largest digital media deals.

First Half Digital Media Deals, 2010 vs. 2009

Social networking, indexing, photo sharing
First half 2010: 29
First half 2009: 21

Blogging, user-generated content and rating
First half 2010: 24
First half 2009: 19

Publisher, aggregator, ad-supported, consumer
First half 2010: 46
First half 2009: 40

Video, online gaming
First half 2010: 40
First half 2009: 28

B2B
First half 2010: 17
First half 2009: 3

Ad Networks:
First half 2010: 15
First half 2009: 13

Lead gen, customer acquisition
First half 2010: 7
First half 2009: 8

Interactive marketing services
First half 2010: 26
First half 2009: 15

Mobile
First half 2010: 84
First half 2009: 39

Search
First half 2010: 5
First half 2009: 5

Ad serving, web analytics, CMS, ad exchange
First half 2010: 54
First half 2009: 32

Web and social media applications, enabling, CDB, IT
First half 2010: 138
First half 2009: 66

Transactions, auctions, e-commerce
First half 2010: 50
First half 2009: 30

Travel, rental, housing
First half 2010: 6
First half 2009: 4

Jobs, classified
First half 2010: 8
First half 2009: 5

Source: Peachtree Media Advisors

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