@ FOBM: Economy Will Impact Billion-Dollar Deals; Old Media Should Buy New Media

When it comes to the shaky economy, the big question is how are deals getting done? A panel at FOBM offered some optimism, saying that companies with cash are looking for well-priced deals, and that old media companies will be looking to Silicon Valley for their next stage of evolution, but they also cautioned there’s no more mega-billion dollar acquisitions. Along with discussion, Newser Founder Michael Wolff, who is writing a book about News Corp (NYSE: NWS) Chairman and CEO Rupert Murdoch, provided a number of colorful insights about Murdoch’s purchase of Dow Jones, one of the biggest media deals of last year.
On how the market changed from a deals perspective in the last four weeks: Scott Peters, managing director of the Jordan Edmiston Group: “The deal market is fantastic. During the first half of this year, it [M&A] was really active and it’s still active, but the type of transactions have shifted. The mega-billion dollar market is gone. The middle of the market is still active with strategic deals — non-private equity deals — and the next flood will be full of challenging situations.” Wolff: “We are going to see a ramp up really quickly. I think you are going to see a vast reconfiguration. It’s going to be about — who has the money, and if you have the money right now, this is a great period. It is the best thing in the whole world that has happened to you. If you are a private equity firm, who closed on financing recently,…this is a fantastic time for you.”
More on CBS-*CNET*and News Corp.-Dow Jones after the jump
On CBS’s purchase of CNET, and a potential Reed Business sale: Wolff: *CBS* won’t see the value of CNET (NSDQ: CNET). “I think that got sold at the top of the market to a dumb buyer, so it’s a perfect combination. Will that come along next year or the year after, it will eventually.” On Reed Business getting done, Jim Casella, CEO of Case Interactive Media: “The price expectation has to come down. I think you’ll have to see people doing a combination of debt and equity if they want to close a deal of significant size.”
On News Corp.’s acquisition of Dow Jones: Wolff: “One of the issues that is certainly on everyone’s mind at News Corp. is that the share price has sunk dramatically. Paying for a newspaper on the cusp of most significant downturn of our time is, relatively speaking, an error. On the other hand, they have a lot of cash, and he’s 77 years old, and that’s the price of having Rupert Murdoch as your CEO. He gets what he wants. From Dow Jones standpoint, I don’t know what shape they would be in if they were a standalone company. They have News’s resources, and Rupert’s full faith and commitment. They are in one of the strongest positions of any media company, and certainly any newspaper company in the country.” Does he get the enterprise side of the business?: “He had no idea there was an enterprise side of the business. I believe I was the one who explained Factiva to him…He wanted the newspaper, and the fact that afterwards he found himself with businesses that were rather more successful than the newspaper business, was surprising.” Is there a battle between the WSJ and the Financial Times?: “Rupert’s battle is with the New York Times (NYSE: NYT). I think they’ve done a bang up job. That’s a battle that will play out is until there’s no more New York Times. That’s a deal that will happen this year.”
On evolving old media: Wolff: “If you are a going concern in the old media business, you are going to be looking at new media companies.” Casella: “There’s a lot of companies in Silicon Valley that are going to be attractive to old media companies on the East coast. Those are worth going out and looking at and buying.”