2008 New Media M&A Round‐Up The Year in Digital Media Mergers, Acquisitions & Capital Raises PEACHTREE MEDIA ADVISORS, INC. N EW M EDIA I NVESTMENT B ANKING EACHTREE EDIA DVISORS NC P M A , I . Better Service ▪ Lower Fees New Media Mergers & Acquisitions TABLE OF CONTENTS I. Internet/New Media M&A Transactions by Sector 1 II. M&A Transactions & Capital Raised in 2008 12 III. 2008 Interactive Media Valuations/Comps 31 IV. Conclusion/2009 Outlook 37 V. Out‐of‐Home/Alternative M&A Transactions 38 VI. Conclusion/2009 Outlook 38 VII. 2008 OOH Valuations/Comps 41 Peachtree Media Advisors, Inc. Peachtree Media Advisors, Inc. is a New York based investment bank serving the out‐of‐ home and interactive marketing sectors of media. The company provides mergers, acquisitions and capital raise advisory services to lower middle‐market companies in the two fastest growing sectors of media. John Doyle, Managing Director & Founder, has been a media investment banker for more than 12 years; closed and structured more than 22 deals; and has a strong knowledge‐base of financial and strategic buyers in these sectors. If you are interested in learning more about valuation, positioning, preparation or the merger and acquisition process, please go to www.PeachtreeMediaAdvisors.com or contact John Doyle at (212) 570‐1009. John H. Doyle II Managing Director & Founder Peachtree Media Advisors, Inc. 50 Vanderbilt Ave., #30 New York, NY 10017 PH. 212.570.1009 ▪ FAX 646.607.1786 www.peachtreemediaadvisors.com Table of Contents Better Service ▪ Lower Fees New Media Mergers & Acquisitions Online Media M&A Activity in 2008 Although the Enabling, Analytics and Ad Serving category had the fourth highest In 2008, there were 707 merger, acquisition level of reported transaction value in 2008, and capital raise transactions in the online this category had the largest percentage sector of media (92 more transactions than increase in capital flowing to it than any the 615 in 2007). The 707 deals were other sector in 2008 (see Capital Raises comprised of 348 capital raises, which are page 5). The increase in capital is substantially more than the 273 capital intriguing, because this same category had raises in 2007, and 359 digital media the highest level of deal value in 2007 on acquisitions that involved a change of account of several large scale acquisitions control. In addition, there were in the sector. Based on exit opportunities, significantly fewer large scale transactions Enabling is the sector du jour for investors. in 2008 and substantially more small Companies that provided tools to online niche‐oriented acquisitions than in 2007. media, i.e. optimization, analysis, applications or more effective content Transaction Value by Sector delivery, raised the most capital in 2008. 2008 Reported Transaction Value by Category In 2008, overall reported transaction deal ($ Millions) value was $16.9 billion in all of the U.S. online media sectors (see chart below): Enabling/ Consumer; Business; Mobile, Enabling and Analytics/ Ad Mobile Commerce. The consumer sector, which is Serving $592 $2,467 comprised of social networking, blogging, 3.5% 14.6% publishers, video and online games, Commerce $2,817 garnered the most attention for M&A Business 16.7% activity in 2008. Transactions in the $4,797 consumer sector totaled $6.2 billion, 28.4% representing 36.7% of all reported transaction value, followed by the online business services sector, which totaled $4.8 billion, or 28.4% of total reported Consumer $6,189 transaction value. 36.7% 2008 M&A Round Up Online Sector Categories (U.S. Only) Online Business Enabling/Analytics/ Consumer Services Mobile Ad Serving Commerce Social Networking/ B2B Mobile Content Search Transactions/ Indexing/Photo/Sharing Auctions Blogging/User Generated Ad Networks Mobile Applications Ad Serving & Travel/Rental/ Content/Rate Technology Housing Consumer Publisher/ Agency/SEM/SEO Mobile Interactive Web Analytics/ Jobs/Classifieds Aggregator/Ad Supported Marketing Services CMS Video/Online Gaming Lead Gen/ Web Applications/ E-commerce/ Customer Acquisition Enabling/IT Comparison Shopping Interactive Marketing Content Delivery Services/E-Mail Networks/Video 1 PEACHTREE MEDIA ADVISORS, INC. Better Service ▪ 2008 Lower Transaction Fees Value Led by Category by the CNET $1.8 by New Aggregator CBS, billion Media the acquisition in of Consumer reported Mergers reported category Publishers of Hellman deal & Acquisitions billion transaction had value, the Getty & in deal highest & Friedman’s which highest value Images category value level IAG and includes in with Research. Nielsen’s acquisition was 2008. $3.4 B2B B2B The category, With acquisition of with next experienced the $2.7 virtually exception of billion value lower all of the in 2008 reported categories 2008 Reported Transaction Value versus 2007. M&A deal $ Millions Jobs/ Classifieds $203 Travel/ Rental/ Housing $132 Transactions/ Auctions/ e-commerce/ Comparison Web Applications/ Enabling/IT/CDN $2,482 Ad Serving/ Web Analytics/ CMS $390 $1,867 Search $210 Mobile $592 Interactive Marketing Services $891 Lead Gen/ Customer Acquisition $348 Agency/SEM/SEO $168 Ad Networks $718 B2B Video/Online Gaming $705 Consumer Publisher/ Aggregator $2,672 Blog/ User Generated $310 Social Networking $3,396 Source: $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 Peachtree Media $1,779 Advisors, PEACHTREE Inc. internal MEDIA M&A A database, DVISORS SEC , Filings INC and . Press Releases. 2 Better Service ▪ Lower Transaction Fees Volume In in 2008 2007, Aggregator the Consumer New category Media & Ad Enabling transactions, had SupportedPublishing, Mergers with & the increase Acquisitions 85 but highest Content 86 transactions in primarilyin deal transactions. Social 2008 number volume was this capital due Networking completely category of to to these The Online targeting an with companies increase sectors transactions,Video with eclipsed is 102 the and social in & transactions,by beginning online venture and Gaming networking substantial video Web with of companies Applications the increase 2008 88 Web as in well in & category Applications, capital as throughout flowing a Enabling the to 2008 Transaction Volume year. & IT # of Deals Jobs/ Classifieds 8 Travel/ Rental/ Housing 9 Transactions/ Auctions/ e-commerce/ Comparison 31 Web Applications/ Enabling/IT/CDN Ad Serving/ Web Analytics/ CMS Search 38 86 11 Mobile Interactive Marketing Services 41 31 Lead Gen/ Customer Acquisition 30 Agency/SEM/SEO 30 Ad Networks 29 B2B 34 Video/Online Gaming Consumer Publisher/ Aggregator Blog/ User Generated 88 Social Networking 85 54 Source: 0 25 50 75 100 125 Peachtree Media Advisors, P Inc. 102 EACHTREE internal M&A MEDIA A database, DVISORS SEC Filings , INC and . Press Releases. 3 Better Service ▪ Lower Transaction Fees Volume The in 2008 chart and year below 2007 increase presents New volume Media and the Ad were by decrease year Supported Mergers individual over Rental & significant in transaction Content; Acquisitions of transactions category. & Housing decreases substantially and categories: category. the completed in There in more Travel, the the B2B; in number Delivery Web transactions There Consumer the Applications were following completed Publishing Analytics; Networks; & & Social Video Ad Content & versus Networking Online Serving Gaming; 2008 and 2007 Transaction theVolume previous Categories & and year. 2008 Transaction Volume in 2008 # of Deals 2007 Transaction Volume Jobs/ Classifieds 10 8 Travel/ Rental/ Housing 19 9 Transactions/ Auctions/ e-commerce/ Comparison 36 Web Applications/ Enabling/IT/CDN 31 Ad Serving/ Web Analytics/ CMS 19 61 Search 14 38 86 11 Mobile 22 Interactive Marketing Services 41 22 31 Lead Gen/ Customer Acquisition 17 30 Agency/SEM/SEO 26 30 Ad Networks 20 29 B2B Video/Online Gaming 34 51 Consumer Publisher/ Aggregator 60 Blog/ User Generated 88 42 Social Networking 85 54 114 Source: 0 25 50 75 100 125 Peachtree Media 85 P Advisors, EACHTREE Inc. internal 102 MEDIA M&A ADVISORS database, SEC , INC Filings . and Press Releases. 4 Better Service ▪ Lower Fees New Media Mergers & Acquisitions Total Capital Raised $ in 2008 and 2007 In 2008, $3.5 billion in reported deal value Peachtree Investment Banking Services of venture capital flowed into all sectors of ¾ Capital Raise media, representing a 22% increase over ¾ Mergers & Acquisitions the amount of reported $2.9 billion in capital raised in 2007. The Enabling ¾ Restructuring & Divestitures category had the largest increase in the ¾ Valuations amount of capital raised attracting $892 ¾ Strategic Partner/Business Dev/JV million in 2008, which represents a 124% increase over the $398 million raised by the sector in 2007. The Mobile sector also saw significant gains in investment capital. The Mobile category raised $341 million in investment capital in 2008, representing a 488% increase over the $58 million raised by the sector in 2007. The chart below presents the reported dollar amount of capital raised by each major online media category in 2008 and 2007 (see category key on page 1). 2008 and 2007 Capital Raise $ Amount (Reported) (000's) $170 Commerce $196 Enabling/Analytics/Ad $398 Serving $892 $58 Mobile $341 $642 Online Business Services $488 $1,630 Consumer $1,622 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 2008 2007 5 PEACHTREE MEDIA ADVISORS, INC. Better Service ▪ Lower Fees New Media Mergers & Acquisitions Drill Down into Capital Raised Web application developers and content delivery networks, as well