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Since I last wrote to you, reading
the economic tea leaves has become an ongoing preoccupation
for most business leaders. We try to weigh the hopeful reports
on economic indicators against the realities of mounting unemployment
and unprecedented levels of toxic debt. On balance, though,
we’re seeing glimmers of hope that maybe, just maybe,
we are starting the long climb out of this recession. Obviously,
we still have a considerable way to go, and challenges lie
ahead, but there are promising signs in response to the Federal
Reserve’s commitment of over $1 trillion to buying large
quantities of asset-backed securities and debt in order to
lower interest rates, revive the housing market, and spur
lending.
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Following the Fed’s
decision, the stock market rallied, driving the Dow
Jones Industrial Average up nearly 25% from its lows
during the week of March 23. Mortgage applications surged
32% for the week ended March 20, according to the Mortgage
Bankers Association, spurred by record low interest
rates, which fell after the Fed’s announcement.
Surprisingly, sales of existing homes rose in February,
up 5% over January levels, according to the National
Association of Realtors. Durable goods orders also increased
in February, by 3.4%, an unexpected rise from the (2.0%)
decline expected and the largest increase since December
2007.
But, the challenges continue. Many economists are predicting
negative U.S. GDP in 2009 and flat growth across the
world. The leading advertising forecasters have revised
their projections downward for 2009. Carat, the media
buying agency of Aegis, recently revised its global
ad spend projection to a decline of (5.8%), after forecasting
4.8% growth for 2009 in August. Barclays Capital revised
its online ad spending projection to a growth rate of
2.3% for 2009, down from a projected 6% increase for
2009 in November. And, media guru Jack Myers projects
a (12.1%) decline in total advertising spend for 2009
and a (5.1%) decrease in 2010. Overall, this chilly
short-term forecast for advertising levels does not
bode well for print publications, and the trickle of
daily newspapers going purely digital could quickly
turn into a steady stream.
Over the past two quarters, despite
the economic downturn and the tight credit markets,
JEGI completed several noteworthy transactions, such
as the sale of Acerno, a leading online behavioral targeting
network, to Akamai; Staffing Industry Analysts, the
premier research, data and analysis firm covering
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the temporary workforce, to Crain Communications;
and mSnap, the largest SMS (Short Message Service) mobile
advertising network in the U.S., to SmartReply. I’m
proud to say that JEGI was ranked #1 once again by both Bloomberg
and 451 Group for M&A deals completed in both the broader
Media industry and the Internet sector.
In canvassing the marketplace for our Client
Briefing, we received upbeat reports from several CEO’s
of major media, information, marketing and technology companies.
They are intent on taking advantage of this economic period
to continue re-tooling their businesses for digital and are
actively seeking strong acquisition opportunities of high-growth,
emerging businesses. For example, George Gallate, Global Chairman,
Euro RSCG 4D told JEGI that his company is “absolutely”
looking forward and actively seeking acquisition opportunities.
Ken Bronfin, President & Group Head, Hearst Interactive
Media is actively searching for acquisition opportunities,
as is Philip Hoffman, EVP of Corporate Development of Pearson,
who reported, “The M&A market is very active right
now, especially in education – maybe more active now
than in the “hot” M&A markets of 2006-2007.”
Another positive growth area for M&A is in healthcare
information and technology, which saw 122 transactions, valued
at $7.3 billion, in 2008 and has a plethora of large global
information companies looking to make additional acquisitions
in this vibrant market sector, including Hearst, Reed Elsevier,
Thomson Reuters, United Business Media, and Wolters Kluwer,
to name a few.
Elizabeth Satin, JEGI’s newest Managing
Director, has years of experience in the healthcare information
and technology sector, where M&A has been particularly
robust in the middle market. Peters Hoenigsberg, CEO of Decision
Resources, told us, “We are still finding attractive
opportunities for growth in this challenging environment.
We are particularly focused on companies with proprietary
healthcare data streams and analytic capabilities.”
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Over the past few months, JEGI and
Booz & Co. have co-hosted two CEO events: 1) the
first Emerging Company Dinner of 2009 on February 26
at the 21 Club in NYC, where more than 30 CEOs gathered
to discuss “Growth.” Our thanks go to Randall
Rothenberg, President, Interactive Advertising Bureau
(IAB) for moderating an invigorating roundtable discussion
at this dinner; and 2) the annual ABM Board Dinner on
March 18 at the Union League Club in NYC, where 30 ABM
Board Members and b2b media senior executives gathered
to discuss the state of their industry. We would like
to thank Gordon Hughes, President & CEO, ABM and
his team for producing an engaging dinner and lively
discussion.
We are also pleased to announce the
release of the sixth annual CEIR Index Report, a leading
source of exhibition industry performance data. As Title
Sponsor, JEGI provides in-depth analysis of the exhibition
industry for the Report, based on our many years of
experience covering this dynamic market.
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JEGI Co-Hosted
the
Annual ABM Board Dinner
(from left) Peter
Goldstone, President, Hanley Wood
Business Media; Scott Peters, Managing Director, JEGI;
Anthea Stratigos, CEO, Outsell; Mike Reilly, CEO,
Randall-Reilly;
and Mike Marchesano, Managing Director, JEGI
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Please enjoy this edition of the Client Briefing newsletter,
and feel free to contact our Managing Directors or me with
any questions regarding the marketplace and/or our services.
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