John Doyle, Peachtree Media Advisors on Digital Media M&A, 2008 Capital Raises and Social Media Co’s Out of Biz
Susan Bratton

Episode 93 - John Doyle, Peachtree Media Advisors on Digital Media M&A, 2008 Capital Raises and Social Media Co’s Out of Biz

John Doyle is an investment banker specializing in the online marketing and social media space. His 2008 M&D and Capital Raising Round Up is free, fantastic and fascinating.
John has a terrific sense of analysis of the media market. John answers my questions:

  • Quarter over quarter, how has the digital media space been wrt M&A and Capital Raising?
  • When did the shit hit the fan?
  • Who were the 15-20 social media companies that silently slipped under last year?
  • What areas will be hot for acquisition in 2009?
  • Of the few transactions that have occurred lately, how would you typify them?
  • Name the remarkable deals of 2008 - the good, the bad and the ugly. (Bebo-AOL, Bezos-Twitter and more)
  • When do you expect a turnaround?
  • What are your indicators for a turnaround?
  • What can companies do to position themselves to raise money? Get acquired? Survive?
  • You recommend strat partnerships to stay alive (better than going under) How do strategic partnerships work? What's a great way for a smaller company to structure a deal?



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[musical interlude]

Susan Bratton: Welcome to DishyMix. I’m your host, Susan Bratton. And on today’s show you’re going to get to meet John Doyle, actually John H. Doyle II. He’s the managing director and founder of a company called Peachtree Media Advisors out of New York.

I happened to find John because he sent me the most amazing and interesting thing. He sent me the 2008 Year In Digital Media Mergers and Acquisitions Roundup. This report is amazing, and you can have a copy for free. We’ll make sure you know where to get it.

But I wanted to bring John on the show because the report was so interesting to learn all about how the digital media space has been with respect to M&A and capital raising in 2008, which social media companies went out of business last year.

That was really interesting to me. What were some of the remarkable deals? We’re going to talk about that. John’s going to give us the good, the bad, the ugly about the deals that went down last year because we can certainly learn from history.

We’re going to talk about the highest level of activity, which sectors have that, what areas might be hot for acquisition, when we can see the market turn, and how you might set yourself up to be acquired or to set up a strategic partnership or what kind of acquisitions might make sense to you for your business in 2009.

So without any further ado, let’s get John on the phone. Good morning, John.

John Doyle: Hello, Susan. How are you? And thank you for having me on.

Susan Bratton: It’s my pleasure, John. So you are an investment banker who has done a lot of deals. You’ve been working in this field for more than 12 years. You’ve done like 22 or 23 deals, and you’re an investment bank serving out of home and the interactive marketing sector of media. That’s kind of your thing, right?

John Doyle: Right. So I focus on two sectors, which I think are the fastest growing: obviously digital media, interactive marketing services, ad-supported content sites. The other sector, which probably your audience isn’t as interested in, is out of out-of-home, which is considered billboards, digital signage, advertising on buses, bus shelters.

But those two sectors are, in the last few years, where the advertising dollars were going away from traditional media and into more of these kind of interactive digital mobile and alternative sectors.

Susan Bratton: You’re right that the out-of-home isn’t as interesting, but digital signage is very interesting to the DishyMix listeners, which is great. But we’re really going to focus on the digital media space. My first question for you is give us a quarter-over-quarter snapshot of last year with respect to M&A and capital raising. What did you see were the trends in how much money was raised?

John Doyle: Quarter-over-quarter with each quarter in terms of M&A, the numbers of acquisitions that involves the change of control dropped significantly in the fourth quarter. I did a report on this that I think you told your listeners about, but the first quarter there were 92 acquisitions, 110 in the second quarter, 104 in the third, and then only 53 in the fourth quarter of 2008.

As far as capital raises go, the number dropped steadily as well throughout the year. There were around 99 capital raises in the first quarter, 89 in the second, 87 in the third, but then 73 capital raises in the fourth quarter.

Susan Bratton: So acquisitions were cut in half between Q2 and Q3 going to Q4. And capital raises went down about 20% but didn’t get as get as hard hit as acquisitions. Acquisitions almost dried up.

John Doyle: No. Basically, M&A activity involving the change in control pretty much dried up.

Susan Bratton: But 50% of the number for capital raises was what? What was the Q1 number for amount of dollars raised in capital versus Q4?

John Doyle: Right. There was 1.1 billion raised in the first quarter of 2008. Then by the fourth quarter of 2008, a lot of the money had dried up, and there was only $535 billion raised. And again, this amount is in reported raised money. Reported deal value.

Susan Bratton: So this isn’t the bridge funding that the existing funded startups are getting from their existing partners? Or is that bridge money in there, too?

John Doyle: No, it’s all the money that is reported, meaning that if someone raises $10 million and they put it out in a press release, that they raised $10 million. Then that will get counted. But sometimes companies raise money from angel investors or other companies that they don’t want to tell the amount that they’ve raised. So this is just the amount that was made public.

Susan Bratton: So John, in 2008, when did you really see the shit hit the fan for the interactive space?

John Doyle: Well, it’s kind of hard to say exactly when, but clearly the economic slowdown affected most other sectors in the economy before interactive media. The reason I say most other sectors is because interactive media and interactive advertising didn’t really become adversely affected until the diversified media companies, which are heavily weighted in newspapers, began missing earnings and lowering their expectations.

But even then, most companies were still investing in social media, still investing in interactive marketing companies, and social media investments was at an all-time high in the first quarter of 2008. The story about newspapers is kind of an age-old story. People had already heard it, and they shrugged it off.

But I think that if you want to pinpoint a time when interactive advertising, digital media companies, mentally felt it, it was when Google missed their earnings. I think it was in the summer around July. Social media was a real darling in fourth quarter ’07, first quarter ’08. I think that first quarter ’08 was just a lot of deals that were in place. They were about to close.

But then towards the end of the year, these small companies were forced to close their doors because there probably wasn’t the access to capital. Even at the corporate level when you had Yahoo close down Yahoo 360, there was a small microblogging site called Pounce that closed down.

I think recently Fox Interactive Media closed down, SpringWidgets. Amazon closed down Alexa. I think your listeners might know of a company called Judy’s Book, which was a local review site. That closed down. MatchMine, a company that raised $10 million a year ago, shut down operations.

Another company I think is Sneakerplay, which was kind of a young, social media site for people who were sneaker enthusiasts. That closed down. I don’t know if that’s all the businesses that closed down, but those are the ones that I can recall right now.

Susan Bratton: Wow. That’s a big list. I was surprised about some of them, like SpringWidgets and Alexa. And even Yahoo 360. I would have assumed it was just absorbed into Yahoo, not really closed down. So that’s interesting to track that.

I want to talk about some of the remarkable deals of 2008. I’d like to get your opinion about the good, the bad, and the ugly, your take on the deals that went down. So let’s start with the good. We’ll be kind. Start with the good. What do you think was one of the most interesting best deals that happened in 2008?

John Doyle: OK. I would say Hellman & Friedman acquiring Getty images. They acquired that in June for $2.1 billion.

Susan Bratton: Whoo! That’s a chunk of change, John.

John Doyle: Yeah, a small chunk of change.

Susan Bratton: Whoo!

John Doyle: [laughs] It goes with the theme that I’m a big proponent of the social media space, and Hellman & Friedman private equity firm purchased Getty Images. Getty Images is one of the largest if not the largest rights-managed image company. And they also sell royalty-free images.

I think this is a good acquisition because the serious portion of what we call the long tail of the Internet, I believe, these pro bloggers or hobby bloggers that are tending to their blogs once a week at least, they’re going to eventually subscribe to Getty for their images.

In addition, I think that was a smart move because traditional publishers like magazines or newspapers are going to close down a lot of the print portions of their publications and move online. This has already happened in some cases.  

As media publishers themselves work to save money, they’re not going to send reporters to do fashion shoots or go to sporting events and all the costs associated with that when they could just subscribe to Getty images and wrap content around an image and license it online. Other acquisitions: CBS acquiring CNET. I thought that was a good one.

Susan Bratton: That was a long time coming. I would have bought CNET myself 10 years ago.

John Doyle: [laughs]

Susan Bratton: I always thought it was a fantastic set of properties.

John Doyle: Yeah, and it’s a good acquisition, I believe, for CBS because it has a large video footprint, attractive audience, and great demographics for them. Another one I liked is Pure Networks. It’s a home office networking company. Cisco bought them.

I just think it’s a good acquisition for them because I read in a few articles that a lot of companies now are allowing their employees to work from home just to save on real estate costs.

Then also in this economic recession, I’m sure that there will be a lot of small businesses, home offices starting up. Then, as I’m a big proponent of social media, a lot of these smaller companies, people are starting them out of their home offices.

Susan Bratton: All three really great brands: CNET, Getty, Pure. What about the bad? This is always the most interesting, and the ugly comes next. Tell us about the bad. What deals would you not have done?

John Doyle: We’ll just call it the bad. I don’t want to get in trouble with anyone that...


John Doyle: I would say not necessarily bad, but questionable would be Comcast...

Susan Bratton: Maybe like school’s still out.

John Doyle: School’s still out. The committee’s still out. Comcast buying DailyCandy. They paid $125 million for it, I believe. DailyCandy is a median [?] and maybe I’m not the target audience, but it just seems like it’s glorified email messaging.

I don’t know the scope and the reach. I understand why they bought it because they have some cable brands, I believe, that are fashion oriented like Fashion TV. And they wanted to allow them to have some online presence.

But I think that they wanted to have some online inventory for them to sell as well as the cable inventory, but I think that they could have bought a list management company because I think it’s just a big email list.

Susan Bratton: Right. $125 million for an email database when you could buy list management, you’re right, would have been a smarter deal, potentially.

John Doyle: Yeah. [laughs] That’s just me. If they buy another company that they bolt onto it to make it scalable. Who knows? Maybe they will.

Susan Bratton: And you thought maybe Glam. They might buy Glam.

John Doyle: Yeah. We discussed that before, and I don’t think that they’ll buy Glam. I said that that might be one that makes this DailyCandy acquisition a better choice for them.

Susan Bratton: And who else was potentially committee’s still out?

John Doyle: I’d probably say Waterfront Media Revolution Health Group, which was a merger, and I’m not a fan of mergers of equals for the sake of cutting costs and market share. The reason is people trust the opinions of their friends or perceived friends versus that of a critic or a random comment. I think this merger ignores the trend toward user-generated blogging and the social media aspect of medical information.

You know how when you call a customer service person, and you want to get someone on the phone? Well, that’s how I feel it will be with medical decisions and medical information. People are going to want to communicate or read about someone that has also gone through this experience.

Susan Bratton: Yeah. That makes sense. That Waterfront is kind of a push company. They’re pushing out diet programs and things. It’s not a highly interactive or social experience, but it could be a platform they bought and they could evolve.

I want to go to a break, and when we come back I want to hear if you have an ugly. I think you do.

John Doyle: [laughs]

Susan Bratton: I want to talk about Twitter and the money they’ve been raising. I want to talk about what you think is going to be hot for 2009 and how we can get acquired or acquire the right thing. So will you stay with me and we’ll be right back?

John Doyle: Yes, I will.

Susan Bratton: Excellent. All right. We’re going to thank my DishyMix sponsors. I did want to let you know just before we go to a break that John has kindly offered two DishyMix listeners to have a free consultation with him. So if you want to preschedule a time when you want to talk about potentially being acquired and what it would be like or what kind of companies might be available for you to acquire in some way in this coming year, he’s a real resource.

You should definitely get this 44-page white paper on all the M&A deals, this roundup thing. You get that at But if you want to get some time with John, you can just go to the DishyMix Fan Club,, and write me a note, and say, “Hey, I’d like to be one of the people that gets a meeting with John,” and we will get that set up.

You know, I love freebies, and John was nice enough to let me give away a little bit of his time. So we’ll do that, and we’ll go to break. Thank my sponsors. Thank you, sponsors. And we’ll be right back for more.


[musical interlude]

Susan Bratton: We’re back. I’m your host, Susan Bratton, and we’re talking to John Doyle from Peachtree Media Advisors. He’s an investment banker that focuses on mergers and acquisitions and capital raises in our industry in the digital media and marketing industry. So John, just before we left we were talking about the good, bad, and ugly. Tell me a deal you thought was just a bonehead deal from your perspective last year.

John Doyle: Well, I’d probably clarify the “ugly.”


Susan Bratton: I won’t put those words in your mouth.


John Doyle: AOL’s acquisition of Bebo for $850 million. I think they just overpaid. It scared the market, and some people are out there saying that they don’t want to pull a Bebo.

Susan Bratton: Oh, yeah. That’s bad.

John Doyle: Yeah. And they’re pulling away from large-scale social media acquisition.

Susan Bratton: What do you think about Twitter? Jeff Bezos just put in $15 million of his own money. They just passed on a deal to take 500 million in stock offered from Facebook. What do you think about Twitter? What is that to you?

John Doyle: Yeah, and they just raised another 35 million a few weeks ago.

Susan Bratton: There you go.

John Doyle: I’m a huge fan of social media. For some reason I’m not a huge fan of Twitter. I think that they should have taken the $500 million in stock offered by Facebook. To me, Twitter is glorified text messaging. People think that because it has a search engine function it will eventually compete with Google. I doubt that. If Google buys Twitter, it’s only going to show that Google is human.

Twitter to me, I guess, I would say it’s like rollerblades eight years ago. It’s kind of a fad. Everybody was doing it. And by the way, I’m one of the people who didn’t rollerblade in the nineties…

Susan Bratton: [laughs]

John Doyle: But I don’t think the company has a business model, or at least one that I’ve seen. It’s going to be a fad like break dancing and parachute pants.

Susan Bratton: [laughs] Well, M. C. Hammer is a big Twitterer, and he loves parachute pants so you could be right.


Susan Bratton: Just a real quick question for you because I want to get into the hot acquisitions for this coming year, but what sectors had the highest level of activity last year?

John Doyle: I’d say the consumer sector. That’s comprised of social networking, blogging, publishers, video, online games. Online games had the most M&A activity in 2008. In the report I show it as 6.2 billion and a reported deal value that was about 36% of the transaction value for that year.

It terms of capital raise, social media was a darling in the first half of the year, but then throughout the year web applications, content delivery networks, ad serving, and analytics companies saw the most capital. Those are companies that help advertisers optimize their ad spin or publishers serve ads or content more efficiently. Those companies found it easier to raise capital last year.

Susan Bratton: That makes total sense, more of the machinery. What areas are hot for acquisition in 2009?

John Doyle: I don’t think there are any. It’s a matter of seeing a few signs of the growth in the economy and then purchasing profitable, growing companies that are highly complimentary.

Susan Bratton: What do you mean by complimentary?

John Doyle: In terms of online media, it would be adding a demographic group or audience to an existing demographic group. Increasing the number of monthly unique visitors where there’s no overlap with users.

Susan Bratton: So accretive users.

John Doyle: Accretive users, yes. Combining video game players and baseball fans might give a media company a larger footprint with men between the ages of 18 and 35. Other acquisitions are probably going to be tools and applications that better serve an existing constituent or demographic group.

If it were a sports site, they’d buy a Fantasy Football application or buy a social network site for video game players. For a large online video game news publishing site, they’d buy a social network and application.

Susan Bratton: So what you’re saying is smaller acquisitions are what you expect for 2009, things that they can kind of roll up, like claw right into the nest of the things that they offer.

John Doyle: Yes, yes, yes. Definitely. Most buyers are going to need or want to prove the ROI for these acquisitions, and they’re going to be hesitant to make big splashy acquisitions right out of the gate. They don’t want to pull a Bebo.

Susan Bratton: [laughs]

John Doyle: At least that’s what I think.

Susan Bratton: Conservative acquisitions.

John Doyle: Yes.

Susan Bratton: When do you think we’re going to start seeing this? Are there indicators for a turn around that will start to loosen things up? What do you track? Trends that you watch to show when there might be some more positive movement in the market?

John Doyle: When valuation is right and the seller accepts a buyer’s offer is when things will turn around in the day. Currently, there’s a valuation cap, meaning that sellers want well above what buyers are willing to pay for their companies. In this environment, venture capital is drying up, and sellers are being forced to get profitable or go out of business.

Those companies that are attractive targets and near profitability are going to be inclined to sell to a strategic buyer at that price. I don’t think this will happen until there are signs of a turnaround, though.

Susan Bratton: And tell us what your indicators are for a turnaround.

John Doyle: Well, everyone has a different answer, and I believe that it’s going to happen toward the end of this year, maybe even this summer. I’m clearly an optimist, but most pessimists expect it to happen in 2010.

Susan Bratton: Any particular things you look at? Just top-of –the-line kinds of things that you watch?

John Doyle: Yes. I would say the way I see a turnaround happening is credit point, looking at new debt issues. Once companies are issuing debt that means that people believe there are free cash flows in the future. I look at commodities prices. A decrease in gold might mean that people are looking for better returns in the market.

An increase in oil means that companies are shipping more, and there’s more commerce. Interest rates. When those increase that means there’s a competitive environment for investment capital. And jobs. That’s pretty much the number one indicator of the economy making a turn. Unemployment is a wagging indicator that the economy is growing.

Once unemployment rate decreases, I believe that public market is going to begin investing significantly at this point. Once that happens, advertising will increase and increase amine[sp?] activity.

Susan Bratton: More amine[sp?]. More advertise. As soon as you see that stuff happening, you know that there’s a turnaround. OK. This is the last question. We’ve run out of time!

John Doyle: OK.

Susan Bratton: What can companies do to position themselves to either raise money, get acquired, or survive? And we’re talking about companies that maybe haven’t been profitable or were just on the cusp of profitability, cash flow break even. They need more capital. What are some things that those kinds of companies could do in this lull?

John Doyle: I think that by now most companies are knee deep in the recession. So to survive, I think companies should lower their costs, try to get profitable. Companies should focus on their core businesses, building relationships with their customers, and consumer online media. That would be their advertisers and their audience. Get a better understanding of who their audience is and try to build a relationship with that audience.

Companies should try to build a one-to-one relationship with their core advertiser and give their best advertisers more access to the target market. So that would be sponsored sections of the site polls, special e-letters, etcetera because one-to-one relationships with your advertiser is strengthened when you know who the types of people coming to your site are.

Other things that people can do are look for strategic partnerships. These strategic partnerships help lower costs and definitely increase revenue. Forming a strategic partnership is pretty much the difference between a company surviving or closing its doors.

As for getting acquired, I would say that the first companies that would be acquired are the ones that already have an existing relationship with the buyer. So these are companies that have strategic partnerships already or some type of business relationship. Most of these acquisitions will be a service or vendor relationship. For example MTV acquired the social networking platform Social Project Flux.

Susan Bratton: Yeah, I never even heard of Social Project Flux. That one completely passed me by. Well, all of this has been so helpful. And we had a lot of other things that we were going to talk about, but I like to keep my shows short so my listeners come back every week to get some new great thing.

What I’m going to do is put up a blog post with some more of the things that you had answered for me. You recommended different ways that strategic partnerships could stay alive. You gave some advice about how a smaller company could structure a deal. You talked about when a company should sell and what the process was.

You looked at what categories buyers and investors are looking for. You talked about consumer content and video. And if you were in the position to be an acquirer, what would be smart acquisitions.

So there’s so much we didn’t get to. I’m going to put it on DishyMix blog, and that will be great. Then anybody who wants your report, the fabulous 2008 M&A Roundup, they get that at Is that right?

John Doyle: Yes.

Susan Bratton: It is advisors with an S?

John Doyle: Yes. Advisors with an S.

Susan Bratton:  Advisors with an S. It’s John Doyle. And if you would like to have a strategic consulting call with John, one of two people from my DishyMix fans, DishyMix listeners go to, and you’ll go to my Facebook fan club. Just write why you’d like to be one of the people that has an opportunity to talk to John. And we will make sure that connection happens and make sure you get your report as well.

John, this has been so great. You’re just a gem of knowledge in our industry.

John Doyle: [laughs] [xx]

Susan Bratton: No, this is really good. Really interesting. I’ll tell you I loved going through those pages and pages and pages on the report that you tracked in seeing all the companies in our space and how much money they raised and who put the money in. It was fascinating.  

John Doyle: Well, thank you, Susan.

Susan Bratton: And John, I’m not a financial person at all. I barely know the difference between a capital raise and an M&A and all those things. So I learned a lot from your report. It was very clearly laid out, and you are very good at articulating the opportunities in the market place and what kind of deals they are. It was all really good. So thank you for that.

John Doyle: Thank you very much.

Susan Bratton: Absolutely. Well, good luck with your business,, and thanks for being on DishyMix.

John Doyle: Thank you and I’ll be in touch.

Susan Bratton: All right. DishyMix fans and listeners, thank you so much for tuning in today to hear John. I hope you enjoyed this segment. A little bit different, a nice departure, and I thought really interesting. I hope it was beneficial for you, too. I look forward to connecting with you next week when I promise I’ll have on as wonderful a guest as I did today. I hope you have a great day. I’ll see you next week.

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