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M&A Surge in Media/Marketing Space

23 Apr, 2014 By: Doug McPherson

NEW YORK – Mergers and acquisitions (M&A) in the marketing industry rose 22 percent in first-quarter 2014, the largest quarterly rise in volume for the sector, says a new study from investment bank Berkery Noyes.

Why? Debt-to-positive-equity ratio in the space. And the bank predicts cash-on-hand could mean many more acquisitions this year.

M&A deals rose slightly from $25.1 billion to $25.8 billion in the quarter, though down from the $43.3 billion high in third-quarter 2013.

TV station group LIN Media’s deal for Media General for $2.6 billion led the activity. Overall, there were 434 media/marketing deals in the first three months of 2014 – versus 423 the quarter before and 417 in first-quarter 2013.

The biggest category – marketing – continues to grow over the past year overall, at around 160 deals in first-quarter 2014, up from around 140 in 4Q 2013. During first-quarter 2013, deal volume was at around 130. Internet media deals stayed consistent during the past year with just under 100 deals being done.

M&A also rose 14 percent in the entertainment content segment. The Walt Disney Co.'s acquisition of Maker Studios for $500 million was the largest entertainment deal during the quarter. Berkery says that transaction includes a potential earn-out of $450 million, so the total value sits at $950 million.

The highest value deal in entertainment's video game subsector was Zynga's acquisition of NaturalMotion Games for $477 million. Following five deals in 2012, Zynga completed just one transaction in 2013.

Also during the period came two deals from the Alibaba Group, the E-commerce and business-to-business portal business where Yahoo! owns a 24 percent stake. The company purchased a 60-percent stake in ChinaVision Media Group, a television and film producer, for $805 million. Alibaba also purchased AutoNavi Holdings, a digital mapping firm.

A KPMG survey suggests 44 percent of executives believe M&A activity will become highest this year among technology, media and telecommunications companies. Some 68 percent expect their company or client to initiate at least one acquisition in 2014, and 73 percent think their own sectors will have the most M&A activity in 2014. Middle-market deals are expected to rule.

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