$800 Million in Cash and a Desire to Devour Surviving Competitors

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NEW YORK ( -- The consolidation of online media sales and technology firms is finally picking up steam.

As has long been expected, industry kingpin DoubleClick has emerged as one of the chief consolidators, last week picking up the technology assets of competitor L90.

As of late last week, DoubleClick was said to be in negotiations to also buy the technology business of another competitor, PubliGroupe's Real Media. However, at press time executives familiar with the deal said the planned acquisition may fall apart over price, with Real Media executives looking for DoubleClick to pay more in light of the completed L90 deal.

$800 million to play with
DoubleClick executives were mum about the Real Media deal. Whatever the outcome, DoubleClick, with more than $800 million in cash and cash equivalents as of the end of the second quarter, is well-positioned to pick up the increasingly inexpensive assets of competitors.

Meanwhile, a lesser-known competitor, Interep unit Interep Interactive, was also entering the fray. Officials at the company said last week that it had bought Mezzo Marketing, a

Hong Kong-based company that represents a group of Asian sites. Interep was also in negotiations to buy the online ad sales side of Real Media, which accounted, according to one person familiar with the company, for slightly more than half of Real Media's revenue.

The outcome of those negotiations was also in question late last week, in part, because of the shaky state of the planned deal with DoubleClick.

Until recently, Mezzo Marketing had been operating under the name 24/7 Media Asia as a partnership between faltering DoubleClick competitor 24/7 Media and Chinadotcom Corp., an Asian Internet company. 24/7, which has been shedding assets throughout the year, began to sell its stake in Chinadotcom and ease its way out of that venture late last year. Financial terms of neither Interep deal were available.

Industry-wide restructuring
The activity last week wasn't just a sign of consolidation; it looked like the beginning of an industry-wide restructuring. DoubleClick, which started in 1995 as an online ad sales company, has taken steps to emphasize its nonmedia businesses, particularly the TechSolutions division that specializes in serving and tracking online ads.

Chris Saridakis, senior vice president of global TechSolutions for the New York-based company, said technology-related acquisitions will be a focus of the company going forward.

"We want to take a leading position in the ad serving space," he said.

Gaining power
The L90 deal, which includes the purchase of the adMonitor serving and tracking technology, and ProfiTools, an online relationship-building technology, solidifies that position. Even before DoubleClick entered talks with L90 and Real Media, the TechSolutions division was gaining ever more power. It accounted for $51.8 million in second-quarter revenue, as compared to the Media division, which accounted for $33.8 million during the quarter. As the year rolled on, DoubleClick has bought a number of other assets, ranging from e-mail companies to media planning technologies.

DoubleClick officials said the shift is due to TechSolutions' growth and not a decision to focus on technology over media.

"We had built this technology to support the media business," Mr. Saridakis said.

If DoubleClick does manage to play in both camps, it may be the only company that can do so for the long term. For L90, the decision to sell its technology business was another outgrowth of the depressed online ad marketplace.

"I believe that in soft markets companies more than ever have to focus on their core businesses," said John Bohan, CEO of L90.

He feels L90 has more potential to capitalize on the slowdown in media, which is taking players out of the market.

"If you look out at the market from a media perspective, there are fewer and fewer companies out there," Mr. Bohan said.

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