Media M&A Pricier In 2010

Arrow upRising fortunes in the stock market have translated into higher prices for media mergers and acquisitions this year.

For the first nine months of 2010, media deals at cash flow multiples -- earnings before interest, taxes, depreciation, and amortization (EBITDA) -- rose 50% to 10.5 times EBITDA versus 7.0 for the first nine months of 2009, according to information and technology investment banker, Berkery Noyes.

Media multiples had been as high at 13 times EBITDA in 2007, then went south to 10 times in 2008, landing at 7.0 times in 2009, the nadir of the big recession.

Overall transaction dollars climbed 80% to $9.4 billion from $5.2 billion in the second quarter. This was also 35% higher than the $6.8 billion in the third-quarter 2009. Estimating sales of media companies by revenue multiples rose almost 30%, or 1.8 times revenues in the third quarter of 2010 versus the same period in 2009.

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Some of the big deals announced during the third-quarter period were: Filmyard Holdings purchase of Miramax Films for $660 million; Dow Jones Indexes purchase of CME Group for $608 million; and Walt Disney's acquisition of Playdom for $563 million.

The fourth quarter may be harder to match versus its comparable period in 2009. That period witnessed a massive $25.2 billion in announced media acquisitions -- roughly half of that coming from Comcast Corp.'s proposed purchase of a majority stake in NBC Universal, at $13.75 billion.

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