Media Deals Up, Value Hits $31 Bil
There were more media deals in the first half of 2012 -- but at lower cash-flow multiples.
There was a 6% rise in the number of media and marketing acquisitions, according to New York-based investment banker Berkery Noyes, to 834 deals for the first six months of 2012. The total value of transactions was up 27% to $31 billion.
Despite this improvement, deals were made at lower financial metrics than for the same period in 2011. The average price of these deals came in at 1.2 times the median revenue versus 1.8 times in 2011. In addition, the average price of media deals was 7.8 times cash flow -- earnings before interest, taxes, depreciation and amortization -- for the first half of 2012 versus 10.0 in 2011.
Marketing was the most active industry segment for first-half 2012, accounting for 262 transactions. Of these, 47% were digital marketing deals, with WPP Group the most active purchaser.
Berkery Noyes says the number of "Internet media" deals declined 2% -- but were still nearly 20% above the last six months of 2010. Deals for exhibitions, conferences and seminars witnessed the largest price rise in total volume -- up over 85% versus the same period a year ago.
Those "entertainment" deals had a 24% rise -- the fourth straight year of growth. The biggest transaction was Lionsgate’s acquisition of Summit Entertainment for $700 million. Video games, part of the entertainment category, climbed 30%; social gaming deals were up 50%. The biggest of these was GREE International proposed deal for Funzio, a mobile game developer, for $210 million.
Evan Klein, managing director at Berkery Noyes, stated: “Of the many possible means of monetizing social games, enticing users to purchase virtual currency and other rewards continues to be the most lucrative model for generating revenue.”