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Berkery Noyes Releases Media and Marketing Industry M&A Report For First Quarter 2014

Monday, April 14, 2014

NEW YORK — April 14, 2014 — Berkery Noyes, an independent mid-market investment bank, today released its Q1 2014 mergers and acquisitions trend report for the Media and Marketing Industry. The report analyzes M&A activity in the Media and Marketing Industry during Q1 2014 and compares it with the past four quarters.

According to Berkery Noyes’ latest research, transaction volume saw a three percent uptick over the past three months. Total deal value also rose slightly, from $25.1 billion to $25.8 billion. The peak for both volume and value throughout the last five quarters occurred in Q3 2013. Please note that the report does not include transactions between cable utilities, which is the reason Time Warner’s proposed merger with Comcast was omitted from the analysis.

The Marketing segment had the industry’s largest quarterly rise in volume, with a 22 percent increase in Q1 2014. This followed an eight percent decline in the prior three-month period.

In terms of additional sectors covered in the report, deal activity in the Internet Media segment decreased eight percent over the past quarter. After more than doubling in Q4 2013, the Exhibitions, Conferences, and Seminars segment experienced a slight decrease in Q1 2014, from 27 to 24 deals.

Total volume in the B2B Publishing and Information segment was flat on a quarter-to-quarter basis. Notable B2B deals in the database information subsector that were backed by financial sponsors included GTCR’s acquisition of Callcredit Information Group for $586 million and Vestar Capital Partners’ acquisition of Institutional Shareholder Services for $364 million. Meanwhile, the number of deals in the Consumer Publishing segment fell 20 percent.

M&A activity in the Entertainment Content segment increased 14 percent in Q1 2014. The largest Entertainment deal during the quarter was The Walt Disney Company’s acquisition of Maker Studios for $500 million, as Disney looks to strengthen its online video network. This transaction also includes a potential earn-out of $450 million, bringing its total enterprise value to $950 million.

The highest value deal in the Entertainment segment’s video game subsector was Zynga’s acquisition of NaturalMotion Games for $477 million. This was the highest value transaction ever recorded by Zynga, going back to its first acquisition in 2010. Also of note, following five deals in 2012, Zynga completed just one transaction in 2013. Zynga has indicated an interest in middleware and technology that will be useful beyond just developing the next big game. This is a different approach to M&A for Zynga when compared to its 2012 acquisition of social game developer OMGPOP, the creator of Draw Something, for $180 million. Other notable acquirers in the video game subset during Q1 2014 included Amazon, which acquired Double Helix Games; and Yahoo!, which acquired Cloud Party.

“The amount of debt and equity currently available in the marketplace is fostering an environment that is favorable to M&A,” said Evan Klein, Managing Director at Berkery Noyes. “As the economic recovery continues to gain traction, companies are increasingly interested in making strategic acquisitions to supplement their organic growth.” Klein continued, “Strategic acquirers are often willing to pay a premium on top of a fair valuation, so they are also the more likely winner in a bidding process with financial buyers. We expect strategics to continue dominating the Media and Marketing landscape as they look for tuck-in acquisitions to accelerate their growth.”

A copy of the MEDIA AND MARKETING INDUSTRY M&A REPORT FOR FIRST QUARTER 2014 is available at the Berkery Noyes website.