-by Brenon Daly, Yulitza Peraza
With investment bank Allen & Co opening its annual conference on July 9 in Sun Valley, Idaho, we thought we’d take a look at what sort of shopping the traditional media companies, which make up most of the confab’s attendees, have been doing recently. The short answer: They’ve been busy. And a lot of the buying has been Old Media picking up New Media. (We’ve noted in the past how Allen & Co has re-tooled its business to meet the change in deal flow.)
In the first half of this year, traditional media companies have spent more on Internet content companies than during any other comparable period. Just Tuesday, for instance, Gannett picked up the chunk of ShopLocal that it didn’t already own. Additionally, NBC took a majority stake in Web content and broadcast sports provider World Championship Sports Network for an undisclosed sum last month. (This acquisition, the network’s fourth since 2006, comes just in time to help bolster its upcoming coverage of the Olympic Games in Beijing.) Also, CBS paid $1.8bn in May for CNET, one of the original online information sites. Altogether, since 2002, Old Media has put more than $13bn toward online purchases.
If anything, we expect the pace to pick up in the second half of 2008, as media companies continue to expand their digital offerings. The shopping spree, however, is a bit late because the model has been broken for a long time. It used to be that traditional media companies could run fatly profitable by simply trading their information and entertainment for your dollars, whether the payment came through subscription or advertising. That exchange worked as long as the information and entertainment could be kept closely controlled. In other words, it worked until the Internet came along.
Acquisitions of content companies by media outlets
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Source: The 451 M&A KnowledgeBase