Number of media deals double in early 2011 research finds
The number of media deals has doubled in the first quarter of 2011 new research by Grant Thornton UK LLP has revealed.
The firm’s M&A tracker has found that the number of deals within the media sector almost doubled from 35 in the first quarter of 2010 to 67 in 2011, reaching £3.5bn – a huge increase from last year’s total of £235m during the same period last year.
The advertising and marketing sector had the largest number of deals during the first few months of the year, with 32 deals being announced, but these only totaled £45m.
Meanwhile, the publishing sector had a total of 24 deals, worth £800m.
Dominic Bolton, media corporate finance partner at Grant Thornton, said: “M&A activity has truly made a return to the media sector, with total cross-sector values up on both the previous quarter and the same time last year. We are not back to the heady days of 2007, but the figures are tremendously encouraging, particularly compared to 2010 when activity rebounded strongly from the lows we saw in 2009 and have been steadily increasing quarter by quarter throughout the year.”
Bolton added that the EMI debt for equity swap worth £2.2bn and the acquisition of Shine by News Copr (£415m) were the two most noteworthy of deals, but highlighted the advertising and marketing, as well as the publishing industry as being the most active for deal making.
“There is a particularly strong appetite to do deals in the Advertising & Marketing space, which saw a flurry of activity this quarter after a fairly quiet quarter in Q4 2010. This could partly be explained by the fact that we have seen a desire by some groups to expand their social media and digital skillset, and others, their geographical footprint. The usual suspects, such as WPP, have been actively acquiring foreign entities,” he explained.
“More ‘traditional’ advertising houses such as M&C Saatchi and Publicist have also been on the acquisitions trail, looking to increase their portfolio by acquiring smaller creatives. This follows on from the steadily increasing appetite we have seen for digital agency bolt-ons over the last few quarters.
“The upswing in publishing deal activity demonstrates the continuing consolidation in B2C magazines (Hearst’s announced acquisition of the international magazine arm of Lagardere) and greater activity in B2B information and face to face marketing. At one end of the spectrum we are witnessing - at last - the tidying up of the more print based portfolios in the likes of RBI and UBM with their sale of Computer Weekly and the Publican portfolio respectively. Meanwhile, Pearson has been particularly acquisitive with its foray into vocational and academia services – their offer for EDI has been recommended – and expansion into India and global tutoring, with an increase in its stake in TutorVista to 76%. “
Bolton concluded by stating that the themes driving the higher level of activity within the media were through consolidation for traditional print media, as well as a continued search for content, technology platforms and new markets.