NEW YORK — January 10, 2018 — Berkery Noyes, an independent mid-market investment bank, today released its full year 2017 mergers and acquisitions trend report for the Media and Marketing Industry. The report analyzes M&A activity in the Media and Marketing Industry during 2017 and compares it with data covering 2015 and 2016.
Deal volume saw a slight uptick on a year-to-year basis, with a total of 1,847 transactions. Aggregate value fell 39 percent, from $270.89 billion to $166.04 billion. However, overall value more than doubled from 2015 to 2016. The major rise during 2016 was due in large part to AT&T’s announced acquisition of Time Warner for $105.27 billion. Also of note, there were two deals in 2017 with disclosed values above $10 billion, compared to four such deals in 2016 and none in 2015.
In terms of valuations, the median revenue multiple moved downward from 2.1x to 1.5x, while the median EBITDA multiple declined from 11.5x to 9.8x. Over the past three years, deals in the $10-$20 million range received a median enterprise value multiple of 1.7x revenue, compared to 2.5x revenue for those in the $20-$80 million range and 2.9x revenue for those in the $80 million and above range.
The industry’s largest transaction in 2017 was The Walt Disney Company’s announced acquisition of 21st Century Fox, which includes the Twentieth Century Fox Film and Television studios, along with cable and international TV businesses, for $66.1 billion. The Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network will be separated by 21st Century Fox into a newly listed company that will be spun off to its shareholders before the acquisition.
Regarding specific industry sectors, the Internet Media segment underwent a six percent yearly decrease in deal activity. The segment’s largest transaction during 2017 was The Walt Disney Company’s announced acquisition of a majority stake in BAMTech, a technology and video streaming company previously owned by the media and Internet business of Major League Baseball, for $1.58 billion.
The Marketing segment, which for the purposes of this report excludes pure software-based companies, experienced a ten percent decrease in volume. This followed a four percent rise in 2016. Notable segment transactions over the past twelve months included Vivendi SA’s acquisition of a 60 percent stake in Havas, an advertising and communications group, for $2.43 billion; Bain Capital’s announced acquisition of a majority stake in Daymon Worldwide, a provider of brand development, retail merchandising services, and consumer experience marketing, for $413 million; and Vector Capital’s acquisition of a 75 percent stake in Experian’s Cross-Channel Marketing business for $300 million.
M&A activity in the Entertainment segment declined five percent year-over-year, returning to its 2015 level. High profile gaming related deals in 2017 included United Luck Consortium’s $1 billion acquisition of Outfit7, a media franchise with various mobile applications, which have received more than 5 billion downloads; Aristocrat Leisure’s announced acquisitions of Big Fish Games, a producer and distributor of casual games for computers, mobile devices and consoles, for $990 million and Plarium, a social gaming company, for $500 million; Scientific Games’ announced acquisition of NYX Gaming Group, an online gambling technology provider, for $631 million; and Stillfront Group’s announced acquisition of Goodgame Studios, an online games development company, for $322 million.
Deal flow within the B2B Publishing and Information segment improved four percent on a yearly basis. Notable B2B segment transactions included Gartner’s acquisition of CEB Global, a corporate research and advisory firm, for $3.3 billon; Moody’s Analytics’ acquisition of Bureau van Dijk Electronic Publishing, a provider of business intelligence and company information, for $3.27 billon; and Zurich-based family office TBG’s acquisition of DTN, which distributes real-time weather information to farmers and other customers, for $900 million.
“The ongoing trend toward non-print based delivery has led to changing business models in some instances,” said Mary Jo Zandy, Managing Director at Berkery Noyes. “This includes many along the spectrum from recurring revenue offerings to purely advertising based revenue ones. Nonetheless, strong original content is still king in the B2B marketplace, regardless of the delivery mechanism.”
As for other sectors covered in the report, volume in the Consumer Publishing segment increased 13 percent over the past year, from 144 to 163 transactions. The number of deals in the Exhibitions, Conferences, and Events segment improved ten percent, from 126 to 139 deals. M&A activity in the Broadcasting segment nearly tripled, from 44 to 122 acquisitions, which was close the segment’s volume level in 2015. One high profile deal in 2017 that spanned multiple industry segments was Meredith Corporation’s announced acquisition of Time Inc. for $2.79 billion. With this transaction, Meredith’s local television business will offer advertisers and marketers deeper reach to consumers across digital, television, print, video, mobile, and social platforms.
A copy of the MEDIA AND MARKETING INDUSTRY M&A REPORT FOR FULL YEAR 2017 is available at the Berkery Noyes website.