Communications Deals Top $100-Billion Mark

Financial transactions in the communications industry topped $100 billion for the first time last year, according to a report from New York media investment banking firm Veronis, Suhler & Associates.

The report said $113 billion in transactions included mergers and acquisitions, public offerings, private placements, redemptions and other corporate financings made by publicly reporting companies during 1996.

Broadcast and cable television deals--led by Disney’s $19-billion purchase of Capital Cities/ABC--were particularly strong, while the dust settled in the film industry after two years of dizzying merger and acquisition activity. Kirk Kerkorian’s private purchase of MGM is not included in the report. Also very strong were the radio, interactive media and business information sectors.

Deregulation and a surge in ad spending helped fuel the leaps in broadcast television and radio. Sales multiples for these broadcast industries were 4.5 times revenue, up from 3.5 times revenue in 1995. The report calls radio’s jump from only $69 million in mergers and acquisitions activity in 1995 to $13.4 billion last year a “big surprise.”

The explosion of radio activity followed the passage of the Telecommunications Act of 1996, allowing a single network to own up to eight stations in a geographic area. Veronis, Suhler Managing Director James Rosenfield, former head of the CBS television network, said he expects radio to “continue in a repositioning frenzy, in every single market” this year.

The go-go climate for interactive media company acquisitions and public offerings drove that segment to $5.4 billion worth of activity, nearly doubling the 1995 figure. That industry also saw its first billion-dollar transactions in the purchase of Internet access provider UUNET Technologies by MFS Communications ($2 billion) and CUC International’s acquisition of software maker Davidson & Associates ($1 billion).

This is the sixth year Veronis, Suhler has compiled the report.