‘Center of Gravity’ Has Shifted in Media M&A
JEGI releases 2008 year-end report.
The “center of gravity” has shifted in media M&A, with deals moving from larger traditional media deals to mid-sized digital and data deals, the Jordan, Edmiston Group said in its 2008 year-end report released this week. In fact, only 12 percent of the dollars spent on media industry deals tracked by JEGI last year came from traditional media.
JEGI tracked 758 media deals in 2008, down 13.1 percent from 872 in 2007. Deal values last year, however, dropped 68.1 percent to $33.3 billion, down from $104.4 billion in 2007.
“2008 was the year that magazine M&A didn’t get done,” JEGI managing director Scott Peters told FOLIO:. “There were very few, if any, transformational, sort of eye-popping magazine deals.”
Instead, JEGI identified four growth sectors in 2008: database and information, b-to-b online media, consumer online media and interactive marketing services—a sector Peters described as including service providers that “sit between advertiser, marketer and the end user or medium.”
“In the old days, they would have been ad agencies. Today, they are a mix of technology companies, service providers and marketing companies,” Peters said.
According to the report, the number of interactive marketing deals in 2008 fell 1.5 percent to 258 and values slipped 49.8 percent. The number of online media and technology deals last year fell 18.1 percent to 258 and values were down 26.4 percent.
“These sectors dropped but they are still showing big numbers,” Peters said. “Mega deals were pulled out of the market after the second half of last year.”
The educational and professional publishing sector saw the steepest declines in 2008, with values down 97.9 percent and the number of deals down 26.1 percent to 17. Not far behind was the consumer magazine category, which saw deal values fall 97.2 percent and the number of deals slip 25 percent over 2007. The number of b-to-b deals in 2008 was down 46.3 percent to 22 and values sank 91.9 percent.
Newsletter publishing was the only category to see growth in both number of deals (up 33.3 percent) and deal values (up 5.9 percent) in 2008. The number of database information services category deals increased 77 percent to 46 but values fell 58.9 percent to $21.4 billion (still, the second-highest valued category tracked).
“There are still a lot of deals getting done in online media, tech and in the growth categories,” Peters said. “The majority are strategic buyers that are transforming their portfolio companies. What affects publishers is that the advertising spend is into interactive and more measurable media, and the buyers are looking at acquiring innovative companies that transform their portfolios and will help their businesses capture the growth dollars going forward.”