Study: M&A Market Indicates Convergence

Despite a "definite uptick" in recent weeks, mergers and acquisitions in the broader media markets continued to decline during the second quarter of the year, according to new analysis from Jordan Edmiston Group. During the period, the investment bank recorded 171 announced transactions valued at $4.1 billion across the media, information, marketing services and technology sectors.

JEGI attributed the recent signs of life to sellers adjusting their expectations, along with buyers regaining some modicum of confidence.

While "swinging from defensive positions," strategic buyers are "looking for opportunities to accelerate growth and tap into new business models," according to JEGI. To gain market share and keep more revenue in-house, global media companies are focused on building integrated solutions across multiple media channels.

"We believe the [business-to-business] media world is coalescing around a multi-product strategy, creating vertical branded media properties that embed multiple touch points in the customer's workflow," said Phil Siegel, general partner at Austin Ventures.

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During the period, online media and technology accounted for 84 transactions valued at $1.3 billion. Both major media companies and financial firms were active in acquiring online media content, social networking, gaming, job portals, e-commerce, and enabling technologies.

On the strategic side, Walt Disney Company acquired a 27% stake in Hulu and also acquired Kaboose, while AOL acquired two local online content players, Patch Media and Going.

On the financial side, Spectrum Equity and Bain Capital acquired Survey Monkey, which provides enabling technology for survey solutions, and Florida Merchant Capital acquired WorkTree.com, a job portal.

The marketing and interactive services sector, meanwhile, saw 66 transactions valued at $877 million during the first half of the year. Total deal value, however, was a small fraction of first-half 2008 levels, as there were no multi-hundred million-dollar transactions.

A few of the noteworthy transactions in the second quarter included ZM Capital and Palladium Equity's acquisition of Canella Response Television, Sapient's $50 million acquisition of Nitro Group, and Microsoft's $40 million sale of Greenfield Online's Internet Survey Solutions to Toluna.

Activity rose 46% in the mobile media and technology sector -- an increasingly active M&A market according to JEGI -- with a dynamic and growing group of companies.

Media analyst Jack Myers predicts that mobile advertising will grow 28% in 2010 and 30% in 2011, and JEGI has completed two recent transactions in this segment.

JEGI chart-First Half M&A Transactions & Value

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