Digital media M&A/fundraising dn 62% in '08

Suffice it to say, it was a lousy year for exits and raises last year

It's not surprising that 2008 was a pretty dismal year for media companies. In particular, digital media companies were hard hit, when it comes to M&A exits and funds raised. 

A report by Peach Tree Media Advisors, which was just sent to my inbox, says there was $16.9 billion worth of merger, acquisitions and capital-raise transaction in the online sector of media. This amount represented a decrease of 62% from the $44 billion in reported M&A transaction value in 2007, for all U.S. online media sectors. 

While the dollar amount was shockingly lower last year, there were actually more transactions. Last year, there were 707 merger, acquisition and capital raise transactions, 92 more than the 615 in 2007. The 707 consisted of 348 capital raises and 359 acquisitions.

Of the nearly $17 billion in transactions, consumer online media accounted for 37% of the pie, or $6.2 billion. Business online media accounted for 28%, followed by commerce sites, which accounted for 17% of the pie.

It's not all dismal news. Last year, a reported $3.5 billion of VC funds flowed into all sectors of media, up 22% over the reported $2.9 billion in 2007. The enabling sector received the largest increase in the amount of capital raised, receiving $892 million last year, up 124% over the $398 million raised in this sector in 2007. The mobile category attracted $341 million in VC capital, up 488% increase from 2007.

As for the top five sectors in terms of volume of transactions for equity raises in 2008 are:

Video & Online games (59 capital raise transactions), Social networking (57), Web applications/Enabling (47), Mobile (35), Blogging/User-gen (27).