Media Deal-Making Showed Signs of Life in 3Q, JEGI

After spending six months on life support, media deal-making activity showed some signs of life in the third quarter of 2009, according to stats compiled by media investment bank and M&A tracker Jordan, Edmiston Group Inc. (JEGI).

One hundred and sixty-eight media transactions valued at $11.1 billion were announced in the third quarter. That was more than twice the deal value recorded in the entire first half, per JEGI’s third-quarter overview, set to be released Oct. 1.

Typical transactions driving the third-quarter activity were technology- and digital-related deals like Google’s $109 million purchase of On2 Technologies, a video compression software maker; and Adobe’s $1.8 billion acquisition of Omniture, an online business optimization firm.

“It’s still slow, but at least it’s not dead,” said Tolman Geffs, a managing director at JEGI. “We’re looking at areas of innovation like data and video, and there’s just a lot going on. We do expect to see decent deal volume next year. Pricing will remain subdued, but volume is picking up.”

Indeed, deal values remained at their lowest level in six years. For the first nine months of 2009, deal value fell 42 percent while transaction volume decreased 30 percent, with tight credit and sellers under pressure to raise cash. Such is the climate in which McGraw-Hill Cos. has been fielding bids for BusinessWeek.

“There are companies with healthy assets but bad capital that are selling for half of what they would have sold it for in a healthy environment,” Geffs said. “Anything in print, you could probably buy any number of titles with the cash you and I have in our wallets right now if you’re willing to assume the subscription liability.”