Media M&A activity up sharply in 2004

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Merger and acquisition activity bounced back—in a big way—last year in the media and information sector, according to reports released Monday by media investment bank Jordan, Edmiston Group and M&A firm Whitestone Communications.

"I think 2005 will be better than 2004," said Baran Rosen, Whitestone Communications president. "How much better is hard to say, but I think the improvements should be at least as much as this year’s improvement over last year."

"There was a lot of pent-up demand built up through ’01, ’02 and ’03," said Tolman Geffs, managing director at Jordan, Edmiston.

The overall number of deals in the media and information sector totaled 394 in 2004 compared with 301 in 2003, a jump of 30.9%, according to Jordan, Edmiston. The firm calculated that the aggregate value of these deals increased 49.7% to $24.1 billion in 2004 from $16.1 billion in 2003. Among the top advertising-oriented deals of the year was Dow Jones & Co.’s $519 million purchase of MarketWatch.

The b-to-b segment of the media and information sector also thrived, according to Jordan, Edmiston’s tracking. B-to-b magazine deals jumped 25.8% from 31 to 39 between 2003 and 2004, and the value of these deals vaulted 237.7% in the same time frame. Similarly, deals involving exhibitions and conferences increased 27.8% from 18 to 23 between 2003 and 2004, and the value of these deals exploded by 752.8%, from $108 million to $921 million.

Jordan, Edmiston tabulated that the number of online media deals jumped 70.6% from 51 in 2003 to 87 in 2004, and the value of these deals increased 198.5%, to $6.8 million from $2.3 million.

"There are a whole bunch of very effective online companies that have been keeping their heads down and building strong businesses that are now in play," said Geffs of Jordan, Edmiston, which helped complete several online deals in 2004, including the sale of Bitpipe to TechTarget.

Whitestone Communications tabulated that the number of deals in the publishing, information and training sector rose 11.8% to 349 in 2004, from 312 in 2003. The value of these deals jumped 33.3% to $12.0 billion, from $9.0 billion in 2003.

Whitestone calculated that the number of trade magazine/trade show deals stayed flat at 31 between 2003 and 2004. However, the company found that the value of the deals increased 72.6%, from $325 million to $561 million.

Trade magazines were helped by two key deals: Investcorp’s $350 million acquisition of Thomson Media and Ascend Media’s purchase of Medical World Communications, which Whitestone estimated was a $70 million to $80 million deal.

"Magazines and trade shows did not come back from the recession at the same pace as businesses in other fields and, as a result, buyers were more reticent to do deals here and sellers were waiting for better results to go to the auction block," Rosen said.

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