Two experts discuss the implications of this year's M&A activity within the online media and marketing services sectors, as well as their predictions for the consolidation we're likely to see in 2009.
Despite the slowing economy, mergers and acquisitions (M&A) activity within the online media and marketing industries continued at a steady pace in 2008. And although we may be seeing fewer billion-dollar-plus deals in light of the ongoing recession, there's little doubt that 2009 will witness its share of interactive industry consolidation as well.
To put 2008's interactive media M&A activity into perspective, we called on Tolman Geffs and David Clark, both managing directors with The Jordan, Edmiston Group Inc. (JEGI). Together, they provided the following insights on how recent transactions have altered online's competitive landscape. They also provided their outlook for 2009 activity, including a discussion of where we are likely to see the greatest amount of consolidation within the online media and marketing services sectors.
JEGI is a leading provider of independent investment banking services for media, information, marketing services and related technologies. Derived from JEGI's transaction database, the accompanying tables (on this page and the next) provide a complete breakdown of 2008's top 10 M&A transactions in both the online media and marketing services sectors.
iMedia: Of the top 10 M&A transactions that occurred in the online media sector in 2008, which transactions have had or are likely to have the greatest impact on the broader marketplace? And how so?
JEGI: CBS's acquisition of CNET was the last of the really large online media deals for a while, at least until Yahoo spins out its search business to become a pure media play. The CNET deal is interesting in its boldness to push a more traditional TV, radio and outdoor media company aggressively into digital programming and audiences. We expect other major diversified media companies to continue to do the same, but with more mid-size transactions.
On the flip side, AOL demonstrated its persistent tendencies by paying a price for Bebo that enriched the founders with little prospect of doing the same for Time Warner shareholders, continuing a string of ill-considered yet overpriced deals.
iMedia: Going beyond online media, of the top 10 M&A transactions that occurred in the marketing services sector in 2008, which transactions have had or are likely to have the greatest impact on the broader marketplace?
JEGI: WPP's acquisition of Taylor Nelson Sofres (TNS), in the teeth of the economic and financial markets storm, without a doubt will reset the marketing services dinner table. WPP has the non-trivial challenge of piloting the combined group through an inconveniently timed recession, but its management is smart and tough, and it will emerge strong. We expect this transaction will further accelerate consolidation in the marketing services universe.
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