More M&A Activity Predicted

The media industry likely will see a wave of further consolidations this year, although the growth in volume probably won't surpass last year's 109 percent increase from 2004, according to a report to be released today by investment banking firm DeSilva & Phillips.

The company's media mergers and acquisitions database tracked 114 deals with a total value of $5.973 billion in 2005--more than double the value of deals in 2004, and over a billion dollars more than any year since the Internet bubble burst in 2001.

This report marks the second forecast of an uptick in M&A activity. Last week, AdMedia Partners forecast that interactive agencies and agencies specializing in buzz marketing are poised for consolidation.

DeSilva & Phillips also noted that nearly all of last year's notable mergers involved old media acquisitions of new media companies--the Times Company's acquisition of About.com, Gannett's PointRoll grab, and Rupert Murdoch buying MySpace. The much-prophesized reverse trend of new media buying old media has yet to materialize, the report notes, adding: "And we don't think that it will emerge in 2006 either."

The DeSilva & Phillips report posits that major new media executives have "no affinity for media," and that "acquiring a media business would put them into a business they don't understand, and it would probably diminish their own attractiveness as an acquisition target."

The smartest old media companies, the report calculates, are those that are assertively building online properties, which bolster their print properties will additional content and features. "The perfect example is Primedia's purchase of Automobile.com, an online automotive portal that is focused on enthusiasts--replacing About.com which aspired to be the complete generalist's guide to everything that exists."

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