January 24, 2017 TRANSACTION VALUE SURGES IN THE MEDIA & MARKETING INDUSTRY

Berkery Noyes’ Media and Marketing report for full year 2016 showed that deal volume declined five percent on a year-to-year basis. Aggregate value more than doubled, from $105.67 billion to $272.17 billion. The rise in value was due in major part to AT&T’s announced acquisition of Time Warner for $105.27 billion, or $85.4 billion if net debt is excluded.

This was the highest value deal ever tracked by Berkery Noyes in the Media & Marketing Industry. If the Time Warner deal is omitted, overall value increased 58 percent. The Time Warner transaction is being referred to as a vertical merger, in that two different kinds of businesses are being combined. AT&T is planning to diversify its business beyond telecommunications with Time Warner’s vast array of programming.

The Internet Media segment underwent a ten percent yearly decrease in deal activity. This followed a 21 percent rise in 2014. Notable segment transactions during 2016 included Microsoft’s acquisition of LinkedIn, a business social networking site, for $25.93 billion; AOL’s announced acquisition of Yahoo’s core operating business for $4.83 billion; Ctrip’s announced acquisition of Skyscanner, a global travel search site, for $1.74 billion; Ziff Davis’ acquisition of Everyday Health, a digital media company that produces content relating to health and wellness, for $465 million; and Randstad Holding’s announced acquisition of Monster Worldwide, an online jobs site, for $429 million.

The Marketing segment, which for the purposes of this report excludes pure software-based companies, experienced a two percent yearly uptick in volume. Meanwhile, volume in the digital marketing subsector increased seven percent throughout the past twelve months.

“Advertisers are rapidly exploring various digital options,” said Vineet Asthana, Managing Director at Berkery Noyes. “Their revenue mix continues to tilt toward digital at the expense of print, while events hold their steady level of the share of the total.” Asthana continued, “Advertisers are actively searching for media strategies that utilize multiple platforms to reach their target audiences. Historically, their core competencies have not always included mastering the intricacies of digital, print, events, and cross-media marketing. New digital platforms are creating more opportunities to reach specific target groups effectively.”

M&A activity in the Entertainment segment increased four percent year-over-year. High profile Entertainment deals in 2016 included Lionsgate’s acquisition of Starz, a media and entertainment company that provides premium movie and original programming services, for $4.4 billion; NBC Universal’s acquisition of DreamWorks Animation, which creates animated feature films and television programs, for $4.1 billion; IMG Worldwide’s acquisition of Ultimate Fighting Championship, a professional mixed martial arts organization, for $4 billion; and Dalian Wanda Group’s acquisition of Legendary Entertainment, a media company with film, television, and digital divisions, for $3.5 billion.