Digital Media M&As a “High Growth Category,” Despite the Credit Crunch and Fears of Recession: WSJ

October 10th, 2007 Nurlan Urazbaev

A surge in digital media and marketing deals has driven ‘merger and acquisition activity in media to a record this year,’ according to Jordan Edmiston Group, a New York investment bank, as The Wall Street Journal reported today.

MediaDailyNews wrote on Tuesday that “…defiant forces are spurring media and related Internet deals into 2008, defined by some new rules and expectations.

Free market dynamics keep the deal engine chugging despite nagging concerns about the credit crunch, weak U.S. dollar, mounting high-cost debt, tumultuous emerging markets, and retrenching private equity and other lenders. That’s because the baseline objectives remain constant. Money gets behind the best ideas, best management and best practices in global and digital arenas bursting with opportunities. The smartest and most able companies win, delivering a huge windfall to investors.”

The Wall Street Journal  interviewed Mr. Anton Levy of the investment firm General Atlantic which has acquired a number of digital media companies lately. Mr. Levy says the M&A boom in digital marketing will remain hot: “You have got this massive shift that you are seeing where all consumable media is trending towards digital environments and the huge ad dollars that are going to follow that audience. That large secular trend is creating a lot of different things. It’s creating new business models, current companies are trying to adjust their existing business models and a massive amount of people and talent are being attracted to the space.”

Mr. Levy says the rising wave of acquisitions in digital media is not likely to be slowed down by the credit market slump: “Folks like Google, Yahoo, Microsoft and [Time Warner’s] AOL, I think you will see those groups likely to be less affected by some of the macromarket environment issues like the credit market…I think they will largely be unaffected. Folks like ourselves — in the growth-equity part of the private-equity market — will also be less affected by the credit-market environment. So within digital media, which is really a high-growth category, I think you will see less of an impact.”

And, speaking about the ‘hottest’ M&A properties in the digital media space, Mr. Levy named ‘digital exchange marketplace’, ‘advertising networks’ and ‘better targeted advertising’: “I’d say there are a couple of areas that are interesting at this point. You are seeing a number of assets in the digital-exchange marketplace…You are seeing an explosion of advertising networks; you have seen a lot of M&A activity in that area and you will see the area continue to be attractive for investors… Another area is better targeted advertising. Anybody who is able to come to the table and help marketers better target customers is attractive.” 

Although the WSJ article never uses the term ‘digital signage’, it is quite obvious that the interview referred to what we know as ‘digital signage networks’ when mentioning ‘the explosion of advertising networks’ and - partially - in ‘better targeted advertising’.

Entry Filed under: The Big Picture, Uncategorized