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On the “Deals: What’s Next?” panel at PaidContent.org’s Future of Business Media event at the Waldorf=Astoria in New York City, Rafat Ali, PaidContent's editor and publisher, questioned some top media dealmakers on the M&A landscape post-2007.
The panel consisted of:
SOME HIGHLIGHTS:
Regarding the credit crunch and its impact on media deals, Suhler said that larger, billion-dollar-plus deals have the added drama of financing issues. They are feeling stress due to the credit markets. In the deals his firm takes part in, ranging from $100 million to $200 million, there hasn’t been much change, and financing is still available. It’s business as usual, but a little more expensive to get deals done. Kent State's Fine said strategic deals like News Corp.-Dow Jones & Co. won’t be hurt because they are done from positions of strength. On newspaper dealmaking in general, Quadrangle's Rattner began quoting an old Wall Street saying that applies to newspaper M&A as well — don’t try to catch a falling knife. There is too much risk for private equity’s taste at the moment, and there hasn't been a tremendous amount of dealmaking in the sector. The fact that Tribune Co. put itself up for sale — and that only Sam Zell showed up to buy — says something about the industry right now.
WHERE OPPORTUNITIES ROAM
Panelists chimed in on the next big opportunities after the likes of Thomson Financial-Reuters Group plc and News Corp.-Dow Jones.
Most agreed the promise of media dealmaking lies in the niche B2B markets. Jupitermedia's Meckler said: “We, at any one time, are looking at 10 to 20 transactions anywhere from $300,000 on up."
United Business Media's Levin said: “We like small deals. There are limitless opportunities in the fragmented B2B space right now.”
Kent State's Fine concurred, saying small, innovative companies that come up with incremental new ways to report and process data are very interesting right now and that there will always be demand from private equity buyers or established media companies, like McGraw Hill Cos.'s 2004 deal for CapitalIQ.
For dealmaking below the $100 million mark, private equity firms haven't been very active, Levin observed. Above the threshold and in contested auctions, however, there's a lot of action. The boot has switched, he said, from PE firms to strategic buyers because the likelihood of completion is higher. Quadrangle doesn't do much dealmaking below $100 million, Rattner said, adding that smaller deals take as much effort and time as bigger deals. There are certainly plenty of deals out there, and sellers are still expecting high prices.
Suhler identified his firm as more a strategic buyer than a private equity buyer, saying that in B2B media, you're strategic if you have enough scale. VSS has taken companies and doubled and tripled the business by combining businesses and tapping value.
THE FUTURE: NY TIMES, PEARSON'S FT, ENGLISH-LANGUAGE BIZ PAPERS
On the question of whether New York Times Co. will ever be in play, Rattner said, "The family has been very clear. In the face of shareholder pressure, they have stated very clearly that their ownership is a sacred trust and one they will maintain. The family will remain in charge for the indefinite future.”
On the Financial Times, he offered: “Pearson is a little bit of a question mark as far as its long run. It has a variety of different businesses.”
“The entry of Mr. Murdoch into the business world may change everything. You have three English language business newspapers – the WSJ, the FT and the IHT. Not all of them may survive.”
Fine adds: “The pieces of Pearson make sense individually, but together they may not all make sense as a company. I’d expect something to change in the next few years.” — Tom Groppe
See TheDeal.com story Aug. 1 on News Corp. winning DJ See TheDeal.com story Oct. 24 about Tribune buyout on track Go to Forbes.com story Oct. 24 on whether a NY Times buyout could be next See TheDeal.com story Oct. 29 "What credit crunch?" about media M&A Categories Deal Video
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