M&A Media Activity Dropped 23%, Publicis Leads Deal-Making

The overall media economy is still weak -- as well as media mergers and acquisitions activity.

New York-based investment banking firm Berkery Noyes says third-quarter activity dropped 23% to $10.4 billion from $13.5 billion in the third quarter of 2010 -- although there were more transactions: 348 versus 317. The largest deal was Bloomberg L.P.’s acquisition of BNA for $963 million.

The first quarter of 2011 has proven the busiest to date: 399 deals with a transaction volume of $20.7 billion.

The number of third-quarter deals has grown 14% versus the second quarter -- to 348 from 305. But the total dollar volume has declined $10.4 billion from $13.5 billion.

Cash-flow multiples on media deals in the third quarter are now at 14.5 cash flow --  earnings before interest, taxes, depreciation and amortization (EBITDA). This has grown nearly 60% versus the second quarter's 9.2 number. It comes short of the 16.1 cash-flow multiple on deals in the fourth quarter of 2010.

Revenue selling multiples remained steady in the third quarter, at 2.2 times revenues. The investment banker study says this is highest overall in the last seven quarters.

The biggest mover of recent media activity continues to be advertising holding company Publicis Groupe SA, which made 17 deals since the start of 2011. The most recent acquisitions are Schwartz Communications, one of the largest independent PR agencies, and Brazil-based advertising agency DPZ. Berkery Noyes notes that Publicis has made three big deals in Brazil this year.



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