Deal Me In: Media M&A Activity In '09

In December, the economic climate was cited as a reason why NBC Universal's deal to sell a local TV station fell apart. It was merely the latest example of a sputtering media mergers and acquisitions market, ushered in by a shyness to invest and banks' unwillingness to lend as freely as they had.

Will there be robust asset-swapping in 2009? Probably, but not at the prices that saw Univision go for $13.4 billion in 2006--at least according to many senior executives.

The annual survey of 1,500 C-suite executives by AdMedia Partners, an M&A advisory firm, shows that 69% expect to make an acquisition or divestiture this year. And 63% said they foresee attractive buying opportunities in 2009, perhaps as a result of lower pricing. The data was compiled last month via a Web-based survey.

Some 76% of executives said there will be a "sufficient" number of potential opportunities. That's higher than the 64% who said so in 2008. In 2007, 41% were excited about purchasing, when there may have been less optimism about securing high prices.

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Executives don't expect much activity this year in the traditional media space, where the ad market may be undergoing a permanent reorientation. But 56% said they expect M&A activity in the online arena to be weaker in 2009 than a year ago--when there was some action in the first half of the year, perhaps highlighted by CBS buying CNET.

AdMedia said the moderate forecasts for the level of online acquisitions is "similar to those of traditional media for the first time." The survey shows that executives expect acquisitions to be heaviest in, among others, the fields of B-to-B and trade publications.

The survey found that 55% of executives believe online properties are overvalued and that growth opportunities for social-networking sites (71%) and user-generated content sites (51%) are "overrated." (A smaller percentage--28%--felt that was the case in the search area.)

One reason, 52% indicated, is that online media is still struggling with finding a solid business model.

The executives expressed some optimism that banks will begin lending again at more traditional levels at some point in 2009; 71% indicated it would happen in the next 12 months.

In that vein, 73% indicated that they would advise sellers to wait until either that happens or another factor helps to increase valuations again.

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