NEW YORK — October 6, 2014 — Berkery Noyes, an independent mid-market investment bank, today released its third quarter 2014 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 declined 11 percent between second and third quarter 2014. When compared to the first three quarters of 2013, the number of transactions year-to-date underwent a more modest three percent decrease. Meanwhile, total value gained eight percent on a quarterly basis, from $22.7 billion to $24.6 billion.
Upon examination of the Marketing segment, volume fell seven percent in third quarter 2014. However, transaction activity in the segment year-to-date rose eight percent compared to the corresponding timeframe in 2013. The largest Marketing deal in third quarter 2014 was Alliance Data Systems’ acquisition of Conversant for $2.3 billion. This was also the highest value transaction in the digital marketing subsector year-to-date.
Other notable Marketing deals over the past three months included CBS Outdoor’s acquisition of Van Wagner Communications for $690 million in the out-of-home advertising subsector; Blackhawk Network’s acquisition of Parago for $291 million in the incentive marketing subsector; and Lake Capital’s acquisition of The Engine Group for $169 million in the marketing, advertising, and branding subsector. “Businesses continue to look for demonstrable returns on their marketing dollars,” said Mary Jo Zandy, Managing Director at Berkery Noyes. “We will continue to see those dollars skewing toward digital marketing media, at the expense of print and broadcast.”
Regarding other areas covered in the report, volume in the Entertainment Content segment remained constant from second to third quarter 2014. The largest Entertainment transaction in third quarter 2014 and year-to-date was Microsoft Corporation’s acquisition of Mojang, the developer studio that created the video game Minecraft, for $2.5 billion. Another high profile acquirer in the video game subsector during the quarter was King Digital Entertainment, the maker of Candy Crush Saga, which went public in March. King acquired NonStop Games, a Singapore based mobile gaming company, for $16 million. This transaction includes a potential earn-out of $74 million, bringing the enterprise value to $90 million.
Transaction volume in the Internet Media segment improved five percent in third quarter 2014. One of the segment’s largest deals in the quarter was Amazon’s acquisition of Twitch Interactive, a live streaming service for gamers, for $970 million. This followed YouTube’s rumored acquisition of Twitch for $1 billion in second quarter 2014. There were also several notable online real estate information deals during the quarter. This included Zillow’s acquisition of Trulia for $2.9 billion and News Corp’s acquisition of Move, which operates Realtor.com and other websites, for $950 million.
M&A volume in the Consumer Publishing segment, after rising 45 percent from first to second quarter 2014, declined 59 percent in the third quarter. The most active acquirer in the segment was New Media Investment Group with four transactions year-to-date, three of which occurred in the past quarter. This consisted of The Providence Journal for $46 million, Waxahachie Newspapers, and Petersburg Progress-Index.
The B2B Publishing and Information segment saw volume stay about the same on a quarter-to-quarter basis. Financial sponsors were responsible for 28 percent of the segment’s volume year-to-date, as opposed to 14 percent of volume throughout the first three quarters of 2013. Notable B2B deals during the past quarter included Symphony Technology Group’s acquisition of McGraw Hill Construction, which provides data, news, and insights to construction professionals, for $320 million; Penske Media Corporation’s acquisition of Fairchild Fashion Media, the publisher of Women’s Wear Daily, Footwear News, and other trade publications, for $100 million; Shamrock Capital Advisor’s acquisition of Questex Media Group, a business information and events company; and Observer Capital’s acquisition of SourceMedia, which publishes a variety of financial trade publications.
A copy of the MEDIA AND MARKETING INDUSTRY M&A REPORT FOR THIRD QUARTER 2014 is available at the Berkery Noyes website.