Jordan, Edmiston: Media M&A value falls in 2008, but deal flow remains relatively strong

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New York—The dollar value of media, information and marketing services M&A deals declined 68% in 2008, falling to $33.3 billion from $104.4 billion in 2007, according to a report issued last Thursday by Jordan, Edmiston Group, a media investment bank.

The number of M&A deals fell less precipitously, dipping only 13% as the number of deals fell to 758, from 872 in 2007.

While acknowledging that the credit crisis and recession impacted both the size and flow of deals last year, Tolman Geffs, a managing director at Jordan, Edmiston, said the transactions completed (and not completed) in 2008 were also greatly affected by changes in the media and information industry.

“What’s really interesting is that number of M&A deals slowed down but probably not as much as people think it did,” Geffs said. He pointed out that deal activity remained brisk in growth sectors, such as database information services, which saw a 77% increase in the number of deals with deal value nearly tripling to $8.8 billion.

Growth in the industry is shifting away from traditional media to four key sectors, according to Jordan, Edmiston: database and information, b-to-b online media, consumer online media and interactive marketing services. The firm’s analysis of data from a variety of sources indicated that 88 cents of every dollar of industry revenue growth is flowing to these four sectors, while only 12 cents is moving toward traditional media sectors such as magazines, newspapers and events. Because the growth sectors are relatively new, the companies in them remain relatively small and, as a result, so does the dollar volume of M&A deals. Nine of the top 10 M&A transactions were within the four identified growth categories, with Reed Elsevier’s $4.1 billion acquisition of database of information services company ChoicePoint topping the list.

The number of b-to-b magazine deals fell 46%, dropping from 41 to 22 between 2007 and 2008. The value of b-to-b magazine deals plunged 92%, falling, from $5.2 billion to $417 million.

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