Latest M&A Report From JEGI Shows 'Transformative Shift and Retooling' of Media Industry
A report issued this week by mergers and acquisitions firm The Jordan, Edmiston Group Inc. (JEGI) projects a major transformation of the media industry over the next several years with $.88 of every dollar of industry revenue growth flowing to four growth sectors: database and information; business-to-business online media; consumer online media; and interactive marketing services.
Just $.12 is projected to go to traditional media sectors including newspapers, magazines, events, etc. This compares to $.67 of every incremental ad dollar flowing to traditional media sectors from 2001 to 2007, with the other $.33 flowing to the four growth sectors.
JEGI says this industry shift has had a pronounced effect on M&A: the number of transactions in 2008 declined about 13 percent from 2007 to 2008, but the value of these deals was down 68 percent. The report suggests more mid-sized digital and data deals are getting done while larger, more traditional deals have become scarce.
In the magazine industry, consumer magazine transactions declined 25 percent from 2007 to 2008 -- from 56 deals to 42 -- while these deals' value fell 97 percent. B-to-b magazine transactions numbered 22 in 2008, which was down from 41 the prior year, and saw a decrease in overall value of 46 percent. The largest of these b-to-b deals was the purchase of Randall-Reilly by Investcorp.
The lone sector tracked by JEGI to see growth in deal value was newsletter publishing, which saw total deals increase from nine to 12 and the value of these deals rise nearly 6 percent.