Private Equity News & Analysis

Media unlimited

Growth in internet advertising is fuelling media consolidation and private equity is playing its role the tune of €19bn with deals like Clear Channel boosting the total, writes Jennifer Bollen.

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Last year there were 35 private equity deals in the media sector, amounting to €19 billion, according to a report by PricewaterhouseCoopers.  Last year’s level was an increase of 13 percent by volume and 111 per cent by value on 2005.

Overall, European media merger and acquisition deal values rose 75 percent to €43 billion in 2006.  Excluding the UK, deal values rose 123 percent to €37 billion, levels unseen in the sector since the boom in 2000 when 186 deals were recorded at almost €40 million.

Private equity houses accounted for 44 percent of the aggregate value of deals in Europe’s media sector last year and three of the four largest deals were private equity-backed.

The largest was the €7.7 billion acquisition of VNU, a Dutch media group, by a consortium formed by AlpInvest Partners, The Blackstone Group, The Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts and Thomas H. Lee Partners, in June.

In October Kohlberg Kravis Roberts and Goldman Sachs Capital Partners bought Pages Jaunes Group, a French online directory, for €3.3 billion. In December Kohlberg Kravis Roberts and Permira bought German broadcaster ProSiebenSat.1 Media from German Media Partners for €3 billion.

Last year one of the largest private equity deals ever took place in the US when a consortium led by Bain Capital and Thomas H. Lee bought Clear Channel, a radio and television stations operator, for €20.6 billion.

There were also eight private equity exits over €200 million, compared to just five in 2005.  Half of the major exits last year were secondary buyouts.
Pricewaterhouse Coopers said the rise of internet advertising is fuelling consolidation within the traditional printing and publishing sector, particularly in continental Europe.

In Europe the publishing sector attracted the most merger and acquisition deals last year, accounting for 42 percent of deal activity and 62 percent of the highest deal values over €10 million.  The broadcasting and marketing sectors came second and third.

The advisory business expects private equity groups to continue the levels of activity seen in 2006 this year, particularly on the buy-side, driving deals in Europe underpinned by substantial recently raised-funds.