New report puts 2000 media M&A activity at $49.4 billion, $360 million of it in newsletters.

The Jordan, Edmiston Group Inc. (JEGI), an investment banking firm, has released a report stating, "Buyers spent $49.4 billion to acquire 362 media industry properties (not including radio, television and cable broadcasters and entertainment companies) in the U.S. in 2000, an increase of 9.4 percent over the $45.1 billion they spent to buy 384 businesses in 1999." [*]

Activity reached a peak in the first quarter, rising to 118 mergers and acquisitions, and continued at a healthy pace through the remainder of the year despite declines in the ability to finance acquisitions with debt and the willingness of target companies to accept payment in stock.

In the "Newsletters" category (which is separate from one detailing "Business-to-Business Media"), the report states: "Further evidence of the move toward integrated media companies is apparent from the increasing M&A activity and value in the newsletter segment, which benefited from strong corporate profitablity and demand for information to boost management productivity.

"In 2000, the total value of newsletter mergers and acquisitions doubled to $360 million. Private equity investors were active newsletter acquirers, led by Veronis Suhler's purchase of Phillips Business Information for $120 million.

"The largest acquisition by a newsletter publisher was the Bureau of National Affairs (BNA), which obtained Kennedy Information for $47 million. Media-focused private equity investor Wicks Business Information acquired Asset Alternatives and Georgetown Publishing."

In the last issue of NL/NL, we reported that some brokers and investment bankers were expressing reservations about newsletter and specialized information M&A activity in this new year--heading into "heavy weather" in one person's words. However, Wilma Jordan, CEO of JEGI, is more optimistic. She said:

"We expect buyers will continue to have a high number of attractive media companies to choose from as healthy deal prices continue to bring more quality businesses onto the market. And we expect a strong M&A showing in the first-half of this year as these quality businesses continue to command premium prices.

The growing diversification of newsletter publishers' offerings--including conferences, websites bankrolled through sponsorships, and databases--reflects an industry-wide trend. Jordan observed, "Today the diversified media company model has become far more pervasive and sophisticated. Most media companies now produce trade shows, entertainment events and conferences. Websites and database products that leverage print media brands are also commonplace."

In the third quarter of 2000, JEGI completed ten of the 35 magazine publishing and exposition industry media M&A transactions and four of the Top Ten deals by dollar value.

* JEGI also announced this week that Charles A. Richard has joined the firm.

He was formerly vice president of strategic planning for Cahners Business Information Inc., where he completed 31 M&As valued at more than $1 billion.

(*.) This analysis omits the $106 billion AOL/Time Warner deal, whose size was so large as to obscure meaningful trends. Including the AOL deal, total Year 2000 Media M&A spending would be three times that of 1999, or approximately $155 billion.