NEW YORK — July 6, 2016 — Berkery Noyes, an independent mid-market investment bank, today released its half year 2016 mergers and acquisitions trend report for the Media and Marketing Industry. The report analyzes M&A activity during the first half of 2016 and compares it with the four previous six-month periods from 2014 to 2015. 

Deal volume decreased seven percent on a half year basis. Total value gained 49 percent, from $64.91 billion to $96.72 billion. Of note, strategic acquirers represented 88 percent of the industry’s volume and 95 percent of value in first half 2016. The median revenue multiple over the past six months increased from 1.7x to 2.0x, while the median EBITDA multiple rose from 8.8x to 11.1x. Deals in first half 2016 with enterprise values above $160 million received a median revenue multiple of 4.1x, whereas those in the $10-$20 million range had a median revenue multiple of 1.3x.

Transaction activity in the Internet Media segment improved nine percent in first half 2016, making it the sector with the largest increase. The overall industry’s highest value deal year-to-date was Microsoft’s announced acquisition of LinkedIn, a business social networking site, for $25.93 billion. The LinkedIn acquisition accounted for slightly more than one-quarter of the industry’s aggregate value thus far in 2016. LinkedIn’s core database contains over 400 million user generated professional profiles, which is one of the reasons for its inclusion in the segment.

Other notable Internet Media related deals year-to-date included IBM’s acquisition of Ustream, a provider of live streaming video services, for $130 million; Condé Nast’s acquisition of Backchannel, a tech business blog, which was acquired from social publishing platform Medium; Verizon and Heart Corporation’s announced acquisition of Complex Media, a network of sites focused on American popular culture that are targeted towards millennial males; and Warner Bros.’ announced acquisition of DramaFever, an online streaming service that specializes in Korean television shows and movies, which will expand Warner Bros.’ over-the-top (OTT) services.

Volume in the Marketing segment, which for the purposes of this report excludes pure software based companies, saw a two percent uptick in first half 2016. Moreover there was a 13 percent increase in the digital marketing subsector. Also of note, there were no segment deals in the overall industry’s list of top ten highest value acquisitions during the half year period. The segment’s largest transaction year-to-date was XIO Group’s announced acquisition of J.D. Power & Associates, a provider of marketing information that is based on consumer satisfaction surveys and other market research on buyer behavior, which was acquired from McGraw Hill Financial for $1.1 billion.

As for notable recent acquirers in the Marketing segment, newspaper publisher and media holding company Gannett made a move in the space with the announced acquisition of ReachLocal, a digital marketing company, for $156 million. Another high profile acquirer during this period was The Financial Times with the acquisition of Alpha Grid, a content marketing firm.

M&A activity in the Entertainment segment remained about constant on a half year basis. Upon examination of value, six of the overall industry’s top ten largest deals in first half 2016 were Entertainment related, compared to two such deals in second half 2015. The segment’s largest transaction year-to-date was Chinese internet company Tencent Holdings’ announced acquisition of Supercell, the Finnish maker of the “Clash of Clans” mobile game, for $8.6 billion. This was the largest acquisition ever tracked by Berkery Noyes in the video game subsector. Additional high value Entertainment acquisitions in first half 2016 included Lionsgate’s announced acquisition of Starz, a television network, for $4.4 billion; and NBC Universal’s announced acquisition of Dreamworks Animation, which creates animated feature films and television programs, for $4.1 billion.

Regarding other sectors covered in the report, transaction activity in the Exhibitions, Conferences, and Seminars segment declined 20 percent, from 66 to 53 acquisitions, which marked a return to its first half 2015 level. Deal flow in the Consumer Publishing segment fell 27 percent in first half 2016. This occurred after an eight percent rise in second half 2015. Meanwhile, the number of acquisitions in the B2B Publishing and Information segment decreased 19 percent in first half 2016. This followed a 40 percent increase in second half 2015, which was the B2B segment’s most active half year period during the past two-and-a-half years.

High profile B2B related deals year-to-date included IHS’ announced merger with Markit Group, a global provider of financial information services, for $11 billion; IBW Watson Health’s acquisition of Truven Health Analytics, provider of healthcare data, analytics and insights, for $3.57 billion; IHS’ acquisition of Oil Price Information Services, a comprehensive source for petroleum pricing and news information, for $650 million; and Axel Springer’s acquisition of Emarketer, a market research firm that provides data and insights used by digital marketing professionals, for $242 million.

“Original content – unique, must-have and timely – is still king in the market,” said Mary Jo Zandy, Managing Director at Berkery Noyes. “However, more publishers have begun to see the importance of delivering content through multiple channels including online, mobile applications and workflow solutions for businesses and professionals. Through digital first content production, delivery is enabled and optimized in all channels. The most successful business models for content continue to be those with recurring revenue regardless of delivery type.”

A copy of the MEDIA AND MARKETING INDUSTRY M&A REPORT FOR HALF YEAR 2016 is available at the Berkery Noyes website.