Deal-Making Gains Momentum

Media deal-making is still down from its recent high but continues to improve amid a broader economic recovery, according to media investment bank Jordan, Edmiston Group.

Media deals in the first quarter of 2010 totaled $8.2 billion, said the bank, which tracks deal-making across 10 media, information and marketing sectors. That was down 43 percent from the previous quarter, when transaction values amounted to $14.3 billion, reflecting a few big deals like that of Springer Science for $3.4 billion and IMS Health’s sale for $5.2 billion.
But the Q1 deal value came in at well above the $1.5 billion in deals done in the year-ago quarter. The year-over-year rise was largely driven by interactive deals, such as Apple’s purchase of mobile ad network Quattro Wireless for $275 million and Monster’s acquisition of HotJobs for $225 million.
Most of the first-quarter deals were done by strategic buyers rather than private-equity firms, many of them still hurting after having assumed too much debt heading into the recession, said Scott Peters, co-president of the bank.
“They were definitely going through a difficult period because of the amount of leverage they put into [deals], and media went through a big downturn,” he said.
Peters expects deal-making to accelerate in the second half, though, as lending increases and as buyers look to put available cash to use; and as companies unload media assets as those businesses — and presumably, the purchase prices they can command — improve.
“We’re seeing a whole bunch of businesses that are preparing to come to market,” he said. “There’ll be a big step-up.”