AdMedia Partners, a leading merger and acquisition advisor, today announced the findings of its 14th annual survey of nearly 1,600 senior executives at leading media companies. Respondents to the survey anticipate media M&A activity to continue at a surprisingly steady pace. In fact, 80% of the executives surveyed expect their organizations will be involved in media mergers and acquisitions in 2008 despite widespread pessimism about the prospects for U.S. economy.
AdMedia Partners conducted its survey in December 2007 to elicit executive views on media merger and acquisition activity among U.S. companies in 2008. Executives from the U.S. and abroad, whose companies operate in a variety of media – many in more than one – responded to the survey.
“The most striking findings are widespread pessimism among media executives about the prospects for the U.S. economy and the belief that fallout from the sub-prime credit crash will change the dynamic of the media M&A market. While in recent years media M&A has been dominated by financial buyers, it is expected once again to be the domain of strategic players,” said Mark M. Edmiston, a Managing Director of AdMedia Partners.
“As in many other industries, media executives expect the credit crunch to reduce the opportunity for private equity to compete aggressively for acquisitions. However, they also expect strategic buyers to more than fill the gap. Thus, even though private equity will be less active, respondents still anticipate a steady pace of industry transactions. Indeed, 80% of respondents expect their own organizations to complete at least one media acquisition or divestiture in 2008,” Edmiston added.
Respondents do anticipate media M&A deals will be on a smaller scale than in recent years, and that valuations will level off in most sectors after steady expansion since the end of the recession in 2003. Prices are seen as particularly inflated for online media properties, where 62% of respondents believe there is a valuation “bubble,” and most expect it to burst in the next 18 months.
In a significant shift, just 46% of respondents advise prospective buyers to “act now” on transactions, down from 77% a year ago. Not surprisingly, seven in ten respondents advise prospective sellers to “act now,” an insignificant change compared with the 74% who said they would give that advice in 2007. Conviction that valuations will soon drop informed many of these responses, however, a sizeable minority warned against gambling on what might be, and would urge both buyers and sellers to seize opportunities that make good business sense regardless of the condition of the overall market.
To access a copy of the report on the prospects for media mergers and acquisitions in 2008, please visit the AdMedia Partners website at http://www.admediapartners.com.
About AdMedia Partners
Founded in 1990, AdMedia Partners provides M&A advisory services for digital and traditional media, marketing and information businesses. The firm has completed over twenty media M&A deals in the past year, including transactions with Hachette Filipacchi Media, in its sale of assets of Premiere to Wenner Media, Bonnier AB, with its acquisition of Time4Media, and Burrill & Company, in its union with VNU Business Media.