Media M&A deal value declines 65% in first half

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Total deal value for M&A media transactions plunged to $23.2 billion in the first half, down 64.7% from $65.8 billion in the first half of 2007, according to media investment bank Jordan, Edmiston Group. However, despite economic pressures, deal activity actually increased in the first half, with 404 M&A media transactions completed during the period, compared with 397 in the first half of last year. The largest decline was seen in deals valued at more than $1 billion, with only four transactions with a combined value of $9.6 billion completed in the first half, down from 11 deals worth a combined $46.3 billion in the first half of last year. Contributing to last year's first-half performance was Thomson Corp.'s $18.3 billion acquisition of Reuters Group. In the first half of this year, the largest media deal announced was Reed Elsevier's acquisition of ChoicePoint for $4.1 billion. Also, CBS Corp. agreed to buy CNET Networks for $1.7 billion. While the volume of large deals declined in the first half, deals in the middle market saw slightly increased activity. For the first half, 400 midmarket deals were announced, compared with 386 in the first half of 2007. “The issue is more with the banks and their ability to finance transactions,” said Richard Mead, managing director of Jordan, Edmiston. “It is impacting the larger transactions, and it is now moving down the scale and is impacting medium-sized transactions.” However, he said that while the credit crunch is affecting private equity firms' ability to finance larger deals, the overall economy is not yet impacting M&A deals. “The businesses we are working with are actually improving in terms of increased revenue and profitability,” Mead said. “The strategics—major public companies and privately held companies—are still making acquisitions, and they will [continue] to do so even though we are in somewhat difficult times.” Mead said he expects to see a continuing flow of activity in the media M&A marketplace for the remainder of the year. In the b-to-b magazine category, 11 deals with a combined value of about $347 million were completed in the first half, down from 24 deals valued at a combined $2.3 billion in the first half of 2007. M
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