2013-10-03 Berkery Noyes Releases Media and Marketing Industry M&A Report For Third Quarter 2013

NEW YORK — October 3, 2013 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2013 mergers and acquisitions trend report for the Media and Marketing Industry. The report analyzes M&A activity during the three-month period and compares it with data for the six previous quarters.

Deal volume increased six percent between second and third quarter 2013, from 395 to 420 transactions. Strategic acquirers were responsible for the overwhelming majority of deals, accounting for 91 percent of volume in the quarter. The industry’s most active acquirer year-to-date was WPP with 19 transactions, including ten over the past three months.

Total value increased 98 percent on a quarterly basis, from $22.3 billion to $44.1 billion. This significant rise was mainly attributable to two announced transactions: the proposed merger of Publicis and Omnicom in the Marketing segment, and the management buyout of Activision Blizzard in the Entertainment segment. Aggregate value would have increased six percent without the Publicis-Omnicom merger. If the management buyout of Activision Blizzard is also excluded, overall value would have declined 31 percent.

Upon examination of the Marketing segment, volume remained nearly constant, totaling 132 transactions in third quarter 2013. The Publicis-Omnicom merger marks a distinct turning point in the sector, with the creation of a new market leader that is larger than rival WPP. In addition, many transactions in the space up to this point, such as those completed by Publicis, have involved start-ups as well as small overseas targets. “This merger of equals reinforces how the need to compete with some of the larger technology/media companies, including Google and Facebook, is increasing the need for scale at the agency level,” said Evan Klein, Managing Director at Berkery Noyes.

M&A volume in the Consumer Publishing segment increased 27 percent in third quarter 2013. There were several notable newspaper transactions during the quarter that were completed by individual billionaires. Jeffrey Bezos, the founder of Amazon.com, acquired The Washington Post Company for $250 million. Several weeks prior to this, John Henry, the principal owner of the Boston Red Sox, acquired The Boston Globe from The New York Times for $70 million. These prices reflect the difficulties facing newspaper publishers as traditional advertising, a decline in print subscribers, and the shift toward digital content upends the sector’s historical business model. Meanwhile, Warren Buffet has shown an interest in acquiring local newspapers, as indicated by several of Berkshire Hathaway’s deals throughout the last two years.

Regarding other areas covered in the report, volume in the Entertainment Content segment increased 24 percent. Deal activity specifically within the video game subset improved 47 percent. One of the largest transactions in the video game subset during third quarter 2013, aside from the management buyout of Activision Blizzard, was Hasbro’s acquisition of Backflip Studios for $112 million.

Another growth area was B2B Publishing and Information, which saw an 18 percent improvement in volume. The most active related acquirer thus far in 2013 was Reed Elsevier with eight transactions in the B2B segment, including four in the past quarter. United Business Media (UBM) was also active in the M&A market with several transactions. This included the management buyout of UBM Channel, which will be renamed The Channel Company and become an independent business; Mash Media’s acquisition of International Confex from UBM Live in the Exhibitions, Conferences, and Seminars segment; and Metropolis International’s acquisition of UBM’s Property Week magazine in the Consumer Publishing segment.

As for the Internet Media segment, deal volume stayed nearly the same with 98 transactions in the quarter. One notable acquirer in the segment was Zillow, which acquired real estate website StreetEasy for $50 million. This was Zillow’s largest ever disclosed transaction, dating back to its first acquisition in 2011.

A copy of the MEDIA AND MARKETING INDUSTRY M&A REPORT FOR THIRD QUARTER 2013 is available at the Berkery Noyes website.