BtoB Media Business - February 2008 - (Page 14)

M&A Outlook Bruno Budrovic/Laughing-stock.com Pressing Ahead Despite widespread pessimism about the economy, media executives expect to be active on the M&A front this year. BY MATTHEW SCHWARTZ K athleen Thomas, a managing director at media investment bank Berkery, Noyes & Co., has been getting the same question lately from her clients: How is the ongoing economic slowdown affecting b-to-b media deals? ¶ “Everybody is spooked, but I haven’t seen that translate into diminished interest or diminished pricing,” Thomas said, adding that she has several deals in the pipeline. “Some clients are pulling back, but others are happily filling the void.” b-to-b media in the first place.” Berkery, Noyes’ “Outlook and Strategies” report, released in January, was quite bullish on M&A prospects for this year. “After several years of steep increases in valuations—where generous terms drove leverage multiples as high as 10.5 times [EBITDA]—we anticipate stable pricing for the foreseeable future at multiples in the range of four to six times Thomas said that while she expects strategic b-to-b media companies to play a larger role in the deal-making this year compared with the past few years, private equity companies won’t be idle. “There are so many b-to-b media platforms now backed by private equity that they can’t afford to stand on the sidelines,” she said. “If they do, they’re not going to fulfill their thesis of getting into EBITDA,” the report said. Still, because of the economic slowdown—caused by the housing market turmoil, sharp fluctuations in oil prices and a falling stock market, among other factors—media M&A activity this year is unlikely to top last year’s level. Although the $5.6 billion acquisition of Dow Jones & Co., publisher of The Wall Street Journal, by Rupert Murdoch’s News Corp. garnered the most attention in 2007, there were several other major deals. These included Thomson Corp.’s $18.3 billion acquisition of Reuters Group and Pearson’s purchase of Reed Elsevier Group’s Harcourt Education unit for $950 million. According to a report released last month by media investment bank Jordan, Edmiston Group, the media and information M&A market last year saw 838 transactions with a combined value of $109 billion, up 32% and 79%, respectively, from 2006. Both the volume and value of the deals set records, according to Jordan, Edmiston. The online media and marketing services sectors led the charge in 2007, with a combined 555 transactions valued at $43 billion. Reflecting the continuing softness in print media, the b-to-b magazine sector slowed last year. The number of trade magazine deals fell to 38, from 42 in 2006, while the deal value fell to $3.2 billion, from $6.0 billion. The number of exhibition and conference deals rose to 66 in 2007, from 52 in 2006, while the deal value climbed to $1 billion, from $875 million. “2007 was a two-part story,” said David Nussbaum, former CEO of Penton Media, who in January was named chairman-CEO of special-interest publisher F+W Publications after a short stint as CEO of private equity-backed Sundance Business Enterprises. “The first half was very robust, and there was still, relatively, an inexpensive amount of capital available. But as the credit crunch and subprime mortgage mess started to get worse in the second half of the year, I started to hear that larger ratios for deals were coming down.” The slumping economy could soon force the hand of prospective sellers, while potential buyers have reason to play it cool for the next few months, industry observers say. A recent survey by media investment 14 | Media Business | February 2008 | mediabusinessonline.com http://mediabusinessonline.com

Table of Contents for the Digital Edition of BtoB Media Business - February 2008

BtoB Media Business - February 2008
Contents
Upfront
Cover Story
Feature
Sales & Marketing
Events
Online
Production
Circulation
People
Benchmarks
Endnote

BtoB Media Business - February 2008