Media M+As Set New Record, Online Ad Surge Drives Growth

by Joe Mandese, Tuesday, Jul 17, 2007 9:01 AM ET

MEDIA INDUSTRY M&A DEALS SET a new record during the first half of 2007, fetching $76 billion in transaction value, up 78% from $43 billion during the first half of 2006, according to the latest figures compiled by investment banker Jordan Edmiston Group. The number of media companies that went into play also rose, jumping to 399 during the first half of 2007, up 12% from 355 during the first half of 2006. Online marketing and media services continue to be the major catalyst of M+A market activity, tallying $32 billion in transactions, or 42% of the overall value of media industry mergers during the first half. Major online deals announced during the half included Microsoft's acquisition of aQuantive ($5.7 billion), Google's acquisition of DoubleClick ($3.1 billion), and WPP's acquisition of 24/7 Real Media ($649 million). In all, the top 10 online media and marketing services transactions in the first half of 2007 totaled over $24 billion, accounting for 77% of total deal value for the sector. The report attributed the surge in online media M+As to the "extraordinary growth" in online advertising, especially the jump in online video advertising sales, which is projected to grow more than 60% through 2010 to nearly $3 billion from less than $1 billion this year, according to figures from eMarketer. "The story behind the story is the pressing need for greater efficiency of digital advertising delivery," reads the report. "There is a tremendous demand for nuts and bolts companies that improve the deployment, performance, and cost effectiveness of online advertising. This in turn drives M+A, as larger companies assemble end-to-end digital ad management solutions by acquiring smaller outfits, much as DoubleClick and aQuantive had done before being acquired by Google and Microsoft, respectively." Media M+A Deals: First Half ’07 Vs. First Half ’06 (In Millions) First Half ‘07 First Half ‘06 Change B-to-B Magazines Deals Value Deals Value Deals Value Consumer Books 24 $2,334 21 $2,075 +14.3% +12.5% Consumer Magazines 5 $324 5 $1,062 NC -69.5% Database Services 32 $2,719 27 $803 +18.5% +238.9% Directories/Reference 14 $20,173 23 $1,122 -39.1% -- Education/Professional 6 $885 12 $6,490 -50% -86.4% Exhibitions/Conferences 16 $10,119 9 $317 +77.8% -- Marketing/Interactive 38 $515 26 $16,531 +61.6% +66.6% Newsletter Publishing 4 $139 12 $96 -66.7% +44.8% Newspaper Publishing 22 $6,941 46 $9,492 -52.2% -26.9% Online Media 120 $4,213 101 $4,021 +18.8% +4.8% Total 399 $75,907 355 $42,649 +12.4% +78.0% Joe Mandese is Editor of MediaPost.