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Think Big. Move Fast.

Over the last few years TV and Print publishing companies have been acquiring internet companies and providing the primary source of exits as IPOs have been few and far between. Exits have included MySpace and CNet on the top end to last.fm and Plaxo in the middle and Kaboodle and LX.TV on the smaller side.

It looks like there will be fewer such exits in 2009. The major newspaper companies are in trouble (including Tribune and NY Times) with their debt loads which will make acquisitions difficult for them.

It isn’t any better on the TV side. PaidContent reports from UBS Media Week that Viacom has no acquisition plans for a while:

Viacom President & CEO Philippe Dauman told attendees … that the company is focused on organic growth and tended to avoid acquisitions for the past two years… “We have plenty to do in-house; we don’t have to look outside at this point,” he said.

and that NBC is pulling back from M&A.

Zucker added, “ In the 18 months prior to September, I don’t think there was any major media company more active in M&A.” As for pulling back now, “I don’t think that says anything about us more than it says about anybody. We’re in a different time. We’ve got our portfolio.” (I asked Zucker after the session if he had any spending range this for acquisitions—for instance, $50 million dollars might be ok even though nine figures is out. He said no. He also said the company is likely to do more partnerships.)

Fox/Myspace is looking for deals, but only if they’re cheap notes Alley Insider:

MySpace (NWS) CEO Chris DeWolfe told a Reuters conference closed to outside reporters:

DeWolfe said companies worth between $200 million and $300 million just six months ago are now running out of money and willing to sell themselves for less than one-tenth of that value.

But he’s not ready to buy just yet — we still haven’t hit bottom.

“At the lower levels the money dries up, everyone’s looking for some kind of exit and the valuations we’re seeing out there are definitely a small, small fraction of what they were even five or six months ago,” he said, adding that he expects these companies to become even cheaper in the next few months.

IAC takes the same position:

Diller told Reuters Media Summit attendees that IAC would have $2.2 billion in cash by March, and it’s a good chance to add new properties to his empire.

Reuters: “This downturn is going to present opportunities if you’re in the position that we’re in,” he said, citing entertainment, media and search as areas of interest.

“In entertainment and media, I think there’s going to be a ‘cascade’ of acquisition opportunities,” he said, referring to his expectation that the downturn would worsen.

Diller said he would be interested in acquisitions in search, but not to acquire technology.

“The interest would be on audience, we would acquire audience absolutely. We would acquire vertical audiences as we acquired with Dictionary.com, Thesauraus.com,” he said.

Internet startups looking for a big exit will need to keep their heads down and focus on building audience and revenues for the foreseeable future.

  • Al

    Another reason to run a start up lean and mean. Next economic growth cycle will many more <$50M acquisitions. VC’s with large funds are doomed unless they start to focus on hardware plays. The other option will be for VC’s to acquire some founders stock to play in good start ups.

  • http://techlang.com/ TechLang

    How consumer Internet companies find the revenue model in the current recession?

  • http://outtanames999.wordpress.com Outtanames999

    You are kidding, right? I mean I’m not disagreeing with you at face value – true enough, old media won’t be buying new media any time soon

    But you’re missing the boat if you’re pinning your hopes on that as the exit strategy — ever. In fact, though it may not happen in 2009 — more like 2013 — it will in fact more and more be the new media that buys the old media.

    For example, Google’s ad model is essentially the Yellow Pages business model. Now which do you think is more likely, that AT&T buys Google or that Google buys AT&T’s Yellow Pages division?

    See what I mean? In other words, there is no exit strategy. You’ve got the right idea, but the wrong timeframe. It’s over for good, not just temporarily while the old media gets its revenue and balance sheet in order as it works through the current cycle. Far from it. You’re in it for good. You are it. It’s yours. You’ve got it. The new media is the new It Girl. Get it? New media is in charge.

    Oh, you may want to adjust your venture fund’s business plan and financial modeling in light of this. In fact you might want to go do that now. I wouldn’t wait.

  • http://www.transmediacapital.com Michael Downing

    Based on interactions with each of the traditional media companies quoted and many others over the last 6-8 mos, I would have to disagree with this overall suggestion that acquisitions will cease.

    – Acquisitions will occur earlier in the lifespan of the companies and at smaller overall dollar amounts, Media companies no longer want to pay what is fast being described as the “Sequoia Premium” or more bluntly… ridiculous post-money valuations or pre-revenue start-ups in online media

    – The traditional media players overall are willing to take more risk in terms of early-stage acquisitions as long as its balanced by overall price of the company

    – The evidence….some of the very companies who are quoted, and many others are in fact currently in due diligence on numerous acquisition possibilities that are all in the $5M – $25M range

    These companies are effectively forced to “outsource their R&D function” through acquiring innovative young companies…this will not stop because of the financial crisis…and the reason why is because the consumer behavioral trends driving this necessity are not ceasing because of the crisis.

    MD