January 6, 2017 Last Updated 10:25 am

Full Year ‘Media and Marketing Industry M&A Report’ for 2016 from Berkery Noyes

NEW YORK, NY — January 6, 2017 — Berkery Noyes, an independent mid-market investment bank, today released its full year 2016 mergers and acquisitions trend report for the Media and Marketing Industry. The report analyzes M&A activity in the Media and Marketing Industry during 2016 and compares it with data covering 2014 and 2015.

Deal volume declined five percent on a year-to-year basis. Aggregate value more than doubled, from $105.67 billion to $272.17 billion. The rise in value was due in major part to AT&T’s announced acquisition of Time Warner for $105.27 billion, or $85.4 billion if net debt is excluded. This was the highest value deal ever tracked by Berkery Noyes in the Media & Marketing Industry. If the Time Warner deal is omitted, overall value increased 58 percent. The Time Warner transaction is being referred to as a vertical merger, in that two different kinds of businesses are being combined. AT&T is planning to diversify its business beyond telecommunications with Time Warner’s vast array of programming.

In terms of valuations, the median revenue multiple shifted slightly from 2.0x to 2.1x, while the median EBITDA multiple retuned to its 2014 level and improved from 8.7x to 11.2x. Over the past three years, deals in the $10-$20 million range received a median enterprise value multiple of 1.7x revenue, compared to 2.1x revenue for those in the $20-$80 million range and 3.1x revenue for those in the $80-$160 million range and above.

The Internet Media segment underwent a ten percent yearly decrease in deal activity. This followed a 21 percent rise in 2014. Notable segment transactions during 2016 included Microsoft’s acquisition of LinkedIn, a business social networking site, for $25.93 billion; AOL’s announced acquisition of Yahoo’s core operating business for $4.83 billion; Ctrip’s announced acquisition of Skyscanner, a global travel search site, for $1.74 billion; Ziff Davis’ acquisition of Everyday Health, a digital media company that produces content relating to health and wellness, for $465 million; and Randstad Holding’s announced acquisition of Monster Worldwide, an online jobs site, for $429 million.

The Marketing segment, which for the purposes of this report excludes pure software-based companies, experienced a two percent yearly uptick in volume. For the second consecutive year, there were no Marketing acquisitions that made the industry’s top ten list of highest value deals on an annual basis. However, there were two segment deals with disclosed values that reached the $1 billion threshold. Along these lines were Dentsu Aegis Network’s announced acquisition of a majority stake in Merkle, a data marketing firm that specializes in customer relationship management, for $1.5 billion; and XIO Group’s acquisition of J.D. Power & Associates, a provider of marketing information that is based on consumer satisfaction surveys and other market research on buyer behavior, for $1.1 billion. Meanwhile, volume in the digital marketing subsector increased seven percent throughout the past twelve months.

“Advertisers are rapidly exploring various digital options,” said Vineet Asthana, Managing Director at Berkery Noyes. “Their revenue mix continues to tilt toward digital at the expense of print, while events hold their steady level of the share of the total.” Asthana continued, “Advertisers are actively searching for media strategies that utilize multiple platforms to reach their target audiences. Historically, their core competencies have not always included mastering the intricacies of digital, print, events, and cross-media marketing. New digital platforms are creating more opportunities to reach specific target groups effectively.”

M&A activity in the Entertainment segment increased four percent year-over-year. High profile Entertainment deals in 2016 included Lionsgate’s acquisition of Starz, a media and entertainment company that provides premium movie and original programming services, for $4.4 billion; NBC Universal’s acquisition of DreamWorks Animation, which creates animated feature films and television programs, for $4.1 billion; IMG Worldwide’s acquisition of Ultimate Fighting Championship, a professional mixed martial arts organization, for $4 billion; and Dalian Wanda Group’s acquisition of Legendary Entertainment, a media company with film, television, and digital divisions, for $3.5 billion.

Deal flow within the B2B Publishing and Information segment decreased twelve percent on a yearly basis, returning to its 2014 level. Notable B2B segment transactions that reached the $1 billion threshold in 2016 included IHS’ merger with Markit Group, a global provider of financial information services, for $11 billion; IBW Watson Health’s acquisition of Truven Health Analytics, a provider of healthcare data, analytics and insights, for $3.58 billion; and the sale of Thomson Reuters’ Intellectual Property & Science Business to private equity funds Onex and Baring Asia for $3.55 billion.

High profile B2B deals in 2016 below $1 billion included IHS’ acquisition of Oil Price Information Services, a comprehensive source for petroleum pricing and news information, for $650 million; Axel Springer’s acquisition of Emarketer, a market research firm that provides data and insights used by digital marketing professionals, for $242 million; and Morningstar’s acquisition of Pitchbook Data, a research firm that focuses on private equity, venture capital, and mergers and acquisitions, for $180 million.

Transaction volume in the Broadcasting segment over the past year decreased slightly more than one-half, from 92 to 44 deals. The largest Broadcasting deal in 2016 was 21st Century Fox’s announced acquisition of Sky plc, the British satellite television giant, for $22.74 billion. This was the highest value deal tracked by Berkery Noyes in the segment since 2006, when a private equity group led by Bain Capital Partners and Thomas H. Lee Partners acquired Clear Channel Communications for $23.72 billion.

A copy of the MEDIA AND MARKETING INDUSTRY M&A REPORT FOR FULL YEAR 2016 is available at the Berkery Noyes website.

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