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Wall Street investors aren't the only people wondering how long the good times will last. After another banner year for mergers and acquisitions in publishing in 1998, industry executives are hoping for more of the same but bracing for a slowdown.

A study conducted by AdMedia Partners finds 74% of 800 publishing executives surveyed suggest the level of mergers and acquisitions will increase in '99 -- or at least keep up with '98. Yet, even in that statement, there's evidence the bulls are losing ground.

Last year, those surveyed who thought 1998 would surpass or keep pace with the gains of 1997 were 86%, a full 12 percentage points higher than the response this year.

What's more, for the first time in four years, when AdMedia began the outlook survey, executives are evenly split as to whether the pace of merger and acquisition activity will accelerate or slow.

Some 24% of those surveyed said the volume of mergers will rise vs. 25% who predict a decline in volume. Last year, 35% thought M&A activity would increase vs. 14% forecasting a decline.

The optimists are unrelenting in their belief mergers offer companies the quickest route to earnings growth, especially for European publishers hungry to enter the U.S. market.

The pessimists wonder whether there will be anything left to buy.

"Consolidation over the last three years has been intense," one respondent commented. "I don't think M&A activity can continue to increase."


Yet, a good majority of respondents still remain on the prowl; 94% said their companies will "look out for a suitable acquisition" vs. 93% who said that last year.

While nearly all executives say they will be looking for deals, only 53% expect to complete an acquisition in 1999. In last year's survey, 64% of respondents thought they would do so, but only 46% actually did make an acquisition.

According to AdMedia, the call to "act now" while marketplace fundamentals are still strong is as loud as last year. About 65% of executives urged buyers to act now vs. 66% last year. In 1997, a majority of respondents counseled sellers to act.


The survey indicates the time is still ideal for buyers and sellers alike.

"If you want to sell, this is a good time," one respondent said. "There are no guarantees for the future other than the market will change."

Added another: "We know what multiples are today. If a buyer can make it work now, do it. We don't know what the future holds."

The reasons for media property sell-offs remain largely the same as in years past. Publishing companies continue to weed out titles that no longer fit their core strategies. And one publisher's loss is another's gain.

Many buyers are looking for ways to "roll up," by swallowing nearly all the titles in a category in a deliberate attempt to dominate the market. That's just what Primedia did last year, when it bought six housing-guide publishers and instantly seized a leading market position.

Few bargains on purchases out there

If the first four months are any indication, 1999 will outpace 1998 for mergers and acquisitions. But the deals won't exactly be characterized as "steals."

Already, 39 publishers have inked contracts valued at $2.1 billion, according to investment banker DeSilva & Phillips. Last year, April had brought 31 publishing deals worth $823 million.

"There aren't that many more deals occurring, but the value of those deals is getting bigger and bigger," said Reed Phillips, managing partner of DeSilva & Phillips.

So far, this year's largest sales have included Miller Freeman's recent purchase of CMP Media for $920 million and American Media's sale of the National Enquirer and Star to Evercore Capital Partners for $767 million.

Increased interest from foreign buyers is helping drive up the price of certain companies. Emap, Wolters Kluwer, Reed Elsevier, VNU, Hachette Filipacchi and Bertelsmann all hope to step up their U.S. presence.

In '98, the biggest publishing deals included the sales of TV Guide to Tele-Communications Inc. and Petersen Cos. to the U.K.'s Emap. Those two transactions alone accounted for $3.5 billion of the year's total $6.85 billion in publishing mergers and acquisitions.

DeSilva & Phillips recorded 105 publishing mergers last year. In 1997, it recorded 97 transactions valued at a comparatively paltry $2.55 billion.

Business-to-business publishers continued to embrace the strategy of growing through diversification last year, especially by acquiring trade shows, conferences and Internet businesses.

Trade shows accounted for 30 of the 105 transactions, and a survey by the

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