Among the 11 media and information industries tracked, buyers completed 493 deals through the third quarter, representing a 24% increase from the year-earlier period, according to a recent report by media investment bank Jordan, Edmiston Group.
The deal activity is on track to surpass the record levels reached in 2005, when Jordan, Edmiston tracked 525 transactions totaling $56 billion in value. Still, overall deal value was relatively flat through the third quarter of this year, as fewer mega-deals were made in the directory and online media sectors, such as last year's $1.80 billion acquisition of search engine Ask Jeeves by IAC.
Through September, deal activity for b-to-b magazines declined 22% compared with the same period in 2005. However, deal value rose 79%, led by Apax Partners'$464 million acquisition of Incisive Media, and United Business Media's sale of CMP Entertainment Media to Wicks Group of Cos. for $47 million.
"The [b-to-b] sector is still very strong," said Richard Mead, managing director of Jordan, Edmiston. "There's continued interest from both strategic buyers and private equity companies, and they're getting good support from senior-debt lenders."
Reed Phillips, a partner in the media investment bank DeSilva & Phillips, which is a competitor to Jordan, Edmiston, said that although it's "not as frothy a market for b-to-b magazines per se, magazine companies are doing a lot of the transactions." He added that the M&A market, rather than headed for a slowdown, is starting to accelerate.
Earlier this month, Penton Media announced it had agreed to be acquired by Prism Business Media in a deal valued at $530 million, including the assumption or repayment of about $336 million in debt. Prism is expected to integrate Penton properties into its portfolio.
Ziff Davis Media has been on the block for the past few months. The company, which has been beset by financial problems, could be a tougher sell that Penton, observers said, because it will most likely be sold off in bundles rather than as a whole.
"Ziff is going to be a challenge for [Chairman-CEO Bob] Callahan," Mead said. "Selling in clusters is tough to pull off. If buyers know about individual transactions they can change the rules."
As has been the case generally in recent years, online media and marketing and interactive services continue to fuel the media M&A market; together, they accounted for 50% of total deal activity through the third quarter, according to Jordan, Edmiston.
The number of deals in online media increased 82% to 131, from 72 in the year-earlier period. However, the deal value fell 36% to $5.2 million, from $8.2 million. There were 116 marketing and interactive services deals, up from 72 during the same period last year. The deal value rose nearly 50% to $12.7 million, from $8.5 million. M