The report analyzes merger and acquisition activity in the Media and Marketing Industry for the first half of 2012 and compares it with activity in the four previous six-month periods from 2010 to 2011.
Total transaction volume increased six percent during the last six months, from 784 transactions in second half 2011 to 834 in first half 2012. Meanwhile, total transaction value increased 27 percent, from $24.88 billion to $31.51 billion. Despite this uptick, median enterprise multiples in the industry decreased. The median revenue multiple fell from 1.8x to 1.2x and the median EBITDA multiple declined from 10.0x to 7.8x. However, three segments had median revenue multiples of at least 2.0x: B2B Publishing, Broadcasting, and Exhibitions, Conferences, and Seminars.
Marketing was the most active industry segment for first half 2012, accounting for 262 transactions and surpassing Internet Media in transaction volume during the last twelve months. Although Internet Media activity declined two percent compared to second half 2011, it remained 19 percent above its second half 2010 levels. In the Marketing segment, 47 percent of deals were Digital Marketing transactions, which represented a 10 percent improvement on a half-to-half year basis. WPP Group was the largest acquirer in the Digital Marketing sub-segment as well as the overall Media and Marketing Industry.
The segment with the largest rise in volume in first half 2012 was Exhibitions, Conferences, and Seminars with an 85 percent increase. The median revenue multiple in the segment also increased 26 percent relative to first half 2011, from 1.9x to 2.4x.
Consumer Publishing M&A rose 13 percent, improving for the third consecutive half year period. The segment was led in first half 2012 by Berkshire Hathaway’s acquisitions of Waco Tribune Herald, The Bryan College Station Eagle, and 63 daily newspapers from Media General. In addition, the B2B segment was responsible for three of the top nine deals by value and underwent a 10 percent increase in transaction volume.
M&A volume in the Entertainment segment increased for the fourth straight half year, growing 24 percent in first half 2012. The largest related transaction in first half 2012 was Lionsgate’s acquisition of Summit Entertainment for $700 million. Video games, a sub-classification of Entertainment, rose 30 percent in first half 2012 and accounted for 62 percent of the segment’s deals. There was also a 50 percent increase in social gaming transactions during the last six months. The most notable social gaming deal by value was GREE International’s announced acquisition of Funzio, a mobile game developer, for $210 million.
“As we predicted in the press release for our first quarter report, there has been an impressive increase in M&A pertaining to social gaming,” said Evan Klein, Managing Director at Berkery Noyes. “Of the many possible means of monetizing social games, enticing users to purchase virtual currency and other rewards continues to be the most lucrative model for generating revenue.”
A copy of the FIRST HALF 2012 MEDIA AND MARKETING INDUSTRY M&A REPORT is available at the Berkery Noyes website.