Internet Mergers & Acquisitions 2006

From Mediapost

MERGER AND ACQUISITION ACTIVITY IN online media grew dramatically in the first three quarters of this year, compared to 2005, according to media investment bank Jordan, Edmiston Group Inc.

The online media industry saw 131 deals in the first nine months of this year–up from 72 in the same time frame of 2005, according to Jordan, Edmiston. But without any blockbuster deals this year, the total value of online media mergers and acquisitions came to only $5.17 billion–down from $8.14 billion last year.

“In 2005 we had a wave of large acquisitions, from MySpace to AskJeeves to MarketWatch, and now there’s a lot more middle-market deals,” said Adam Gross, vice president of marketing and communications for Jordan, Edmiston. “But these are very, very dynamic businesses, in the forefront of where online businesses are going.”

Gross added that the companies involved in the latest round of M&A are among the most dynamic in the Web space. Gross pointed to DoubleClick’s recent acquisition of online video services company Klipmart (which his firm was involved in) as an example of a “good business that’s growing but that’s not of the size as the ones bought last year.” Also representative of the latest trend are MTV’s purchase of Atom Entertainment for $200 million, buying for $79 million, and Reader’s Digest buying for $66 million.

By contrast, last year IAC/Interactive bought search engine AskJeeves for $1.85 billion, News Corp. purchased MySpace for $580 million, eBay acquired comparison shopping engine for $620 million, and Scripps purchased comparison shopping engine Shopzilla for $525 million.

The dollar volume decline began in the first six months of 2006, which saw 85 online media mergers and acquisitions amounting to just $3.7 billion, compared to 48 deals in the first half of 2005 worth almost $6 billion. Big deals in the first half of 2006 included NBC’s purchase of iVillage for $600 million. Overall, the first nine months of this year saw 493 media deals that totaled $40.2 billion, including 116 consolidations among marketing and interactive services companies, 64 newspaper mergers and 37 consumer magazine deals. In 2005, by contrast, there were 398 mergers totaling $41.4 billion during the first nine months.


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