Among the 1,000 media company executives polled, 75% said there is pent-up M&A demand in the media world, and 66% said they expect activity to rise this year.
The difference between what sellers want and what buyers are willing to pay is narrowing, which makes deals more likely, according to AdMedia's study. For example, respondents said consumer magazines for sale should expect prices of seven to 10 times earnings in 2004, down from eight to 12 times earnings in 2000. Interactive media multiples have shrunk even more dramatically, to seven to 10 times earnings from 15 times or higher in 2000.
While they're being careful with acquisitions, media companies are growing in other ways. The survey found 66% of companies plan to launch new titles this year. Some plans are already in the pipeline, after years of folding titles; Conde Nast Publications launched Cargo in March, Hearst Magazines will introduce Shop Etc. and Time plans for Cottage Living in September.
Buyers are keen on broadcast properties, fueled by the expectation that the federal government will ease curbs on station ownership. They are also seeking out the less advertising-dependent media, such as information publishing and professional publications. Interactive media remains less popular, after the excesses of the dot-com era; 31% of respondents said activity there will be weak.
But media companies appear to have made peace with their online businesses. Sixty-seven percent said the Internet was a revenue stream for their company last year, up from 52% the year before, and 46% said the Internet produced profits for their companies last year, up from 27% in 2002. Even more important, 55% expect new media to be a source of profits next year, up from 40% last year.