A standing-room only crowd at the Jefferies Internet Conference for a panel on the state of M&A … It’s a popular topic at any time, though a panel consisting of senior reps from Disney (NYSE: DIS), Viacom (NYSE: VIA), IAC (NSDQ: IACI) and WPP — all active buyers and investors — during a period of market uncertainty, seemed particularly important. The good news: it doesn’t sound like any of the panelists have lost their appetite for buying and investing.
– Slowdown?: The matter of an M&A slowdown was topic number #1. Lance Maerov, SVP-corporate development, WPP: “Anecdotally, we’re seeing private company valuations come down… (but) we’re still extremely busy.” Wade Davis, SVP, Viacom: “We’re seeing as much if not more… expectations are coming down and a lot of them (startups) need to look for M&A in the absence of easy funds.” Outside of digital: “Almost every single standalone cable channel is for sale (e.g. Weather Channel).” And echoing a note that we’ve heard before, strategic buyers are seeing less competition from financial buyers due to the credit situation.
– Interest areas: The slowdown talk didn’t last for long, as the conversation soon shifted to what areas the buyers are interested in. Davis: “We’re (Viacom) looking for a way to diversify away from cable ad revenues… Viacom, really for the most part, is focused on the youth demographic… and obvious place for us to continue diversifying towards is games.” Also: “We’re very focused on making investments in ad tech and ad enabling.” But, Viacom isn’t interested in owning these companies outright. Bernard Gershon, SVP-corp. strategy, Disney, concurred on being interested in ads, though he also said they’re looking at content — not just video, but stuff like blogs as well. Looking back, Maerov described last year as frothy and said he had no regrets about any deals not done.
– Microsoft-Yahoo: Nobody had anything real bold to say on this, though the general view is that the proposed combination would be good for the market. Jason Rapp, SVP-M&A, IAC (note: in February it was announced that he was transitioning out of this title): “Certainly on the search side, it will create a more competitive environment for publishers looking for search monetization solutions… that will have an effect, potentially quite a positive one.” Maerov: “Any alternative to playing a game with Google (NSDQ: GOOG), where only Google knows the rules of the game, is a healthy development… there’s a lot of execution risk.” Davis: “Hugely positive… Google’s been very hard to partner with.” (a bit of an understatement perhaps, given his company’s $1 billion lawsuit against Google). Gershon: “Ultimately, it’s probably good (for Disney)… Yahoo (NSDQ: YHOO) certainly has faced some troubles of late… They need to partner with someone.”
– Next big thing: Both Rapp and Maerov first mentioned gaming. Maerov noted that there’s a big divergence in the amount of time spent on games and the amount of ad dollars going into that area.
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