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Online Media Mergers Should Continue

By: David Utter

Merger and acquisition transactions tracked by The Jordan, Edmiston Group investment bank (JEGI) showed boosts in the number and value of deals year over year for the first half of 2006; they look forward to seeing "several noteworthy deal closings" across the sectors they track over the rest of the year.

Online Media Mergers Should ContinueJEGI noted in a letter to clients that "the second quarter of 2006 was the third most active quarter in M&A; volume since Thomson Financial began tracking the market in 1985." The firm expressed confidence "that the robust M&A; market will continue."

Private equity firms, such as those that grouped together to purchase Dutch media conglomerate and Nielsen Media Research parent firm VNU, should continue to express interest in investments in the media and information industries. Walter Florence, managing director at the Frontenac Company, cited some trends Internet entrepreneurs may wish to consider:

Other than newspapers and television broadcasting, we are generally bullish on most media and information sectors over the near term. Longer term, the most visible secular trends we see are mobility, continued time shifting of media consumption, and an aging population. It is likely these trends will continue to impact traditional and new media companies and create new investment opportunities.

Before writing up a business plan for the bank, be sure to understand what they might expect to see from it. Wells Fargo senior VP Karen Dorn emphasized diversity as something lenders would like to find:

(C)ontent publishers with an online component (rapidly growing and/or profitable) appear to be driving the most activity. This includes well branded B2B publishers, specialty and niche publishers, and business and information services companies. Needless to say, lenders are looking for opportunities that exhibit a diversified content delivery strategy (print, online, event, etc.) that has some sort of proprietary aspect to it.

Dorn's last sentence should ring a recognizable tone to those who followed the blowup online over CMP Media sending a cease-and-desist to an Irish group in May. CMP claimed it was protecting its pending trademark of the term "Web 2.0" with regards to conferences, or "events" as Dorn would refer to them. The proprietary aspect in CMP/O'Reilly's case is the term Web 2.0.

One example of this could be the growing online video market. With YouTube leading the way, a lot of competition exists for video viewership and content creation. But YouTube has the market share and a brand name growing in recognition.

Perhaps a well-known print brand in media will see a merger or acquisition with YouTube as advantageous. After all, the banks may see it that way too.


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