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On April 13th Google announced a definitive agreement to buy Double Click from private equity firm Hellman & Friedman for $3.1b in cash, a price equal to approximately 20x EBITDA.  Rumors of the sale had been floating for a few weeks (Business Week ran a story on April 3rd) but the deal and the price have raised more than a few eyebrows.

Here’s a brief look at the deal and some thoughts:

DoubleClick is known largely for its Display Ad network which large advertisers rely on for brand building and general online presence.  The network which was founded in in 1995 provides ad-management for pay-for-impression (Cost Per Impression: CPM Based) internet advertisers.  Double Click has more than 1,500 clients, most of which participate in its impression-based business and many of which are major online publishers including AOL and News Corp (MySpace).

Google’s ad business, while varied, is best known for its success with search advertising and pay for performance (P4P) model that generates revenue based on viewers click-thru behavior (sometimes called Cost Per Action or CPA).  Through this system Google has a huge pool of partner sites sharing revenue and displaying the ads.

In Display Advertising, Google has generally lagged and not had tremendous comparative success.  In acquiring Double Click, Google is buying a complimentary service that enhances an area where it is weak.  It is also buying a significant client list, and some valuable, but lesser known technology.  The marriage of services and client lists should give Google a nice opportunity to bundle and sell a larger range of services to its clients.  Buying DoubleClick will help Google compete Strength to Strength with Yahoo in the Display Ad Market.

While there is a clear value proposition for the transaction, one motivation for  the deal, and the price, is likely defensive.  There’s two parts to the defensive front:

First, thought not widely known outside the industry, DoubleClick’s portfolio includes a strong affiliate P4P /Affiliate advertising platform that it acquired through a company called Performics (which retains its name inside Doubleclick.) The search and affiliate marketing tools Performics offers are considered by many in the industry to be among the best products available from a technology standpoint..  In acquiring DoubleClick, Google will successfully keep this little jewel away from competitors who would have been able to use it to potentially eat in to Google’s stronger markets.

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Today, Comcast announced it had reached an agreement to acquire movie-ticketing site Fandango. While the deal size was not deemed "material" relative to Comcast’s financial’s and therefore doesn’t require disclosure, it’s likely the purchase prices falls in or near the range of $165m to $180m. That price is estimated based in part on estimated fees from usage (with unique usage numbers used as reported by Comscore) and in part, relative to the multiples (relative to estimated revenue and usage) applied to eBay’s purchase of concert and sports event ticket-seller Stubhub. ( Stubhub sold for $310m earlier this year).

More specifically, the estimated price uses calculations that try to consider i. an estimated closing rate (e.g. what percentage of unique customers complete transactions versus those at the site to just browse concert ticket prices (at Stubhub) or check movie times (at Fandango); ii. recognition that Stubhub sells concert and event tickets for prices of 5x to 10x typical movie tickets and that generates substantially higher fees per transaction than the $1/ticket service fee at Fandango; and iii. that Stubhubs smaller monthly visitor number decreases their share of ad revenue and total transaction volume.

Fandango, which was founded in 2000 by a consortium of movie distributors and investors, sells tickets for more than 1,300 Theaters. Over the past year, Fandango has been fighting with Movietickets.com for the title of being the most-visited online movie-ticket seller (AOL’s Moviefone which does provide links for ticket sales has far greater usage numbers but is not included in the category). In December ‘06, Fandango had approximately 5.8m unique visitors. In February, a slightly slower month in the cyclical movie industry, Fandango had 3.8m unique visitors who generated approximately 39m page views (according to Comscore statistics).

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Seattle based Getty Images continues to pursue an aggressive expansion model by means of acquisition.

Today, in its second acquisition of the year, Getty Images announced that it was acquiring Ireland-based Pixel Graphics holdings for $135m in cash.

Pixel Graphics Holdings is the parent company to Stockbyte and Stockdisk, two royalty-free content providers. The transition will be an easy one: most of Stockbyte’s image collection was already distributed through Getty, and the remainder of its catalog will follow shortly.

Speaking of the transaction, Jonathan Klein, Getty Images’ co-founder and Chief Executive Officer said: “Worldwide demand for imagery continues to grow as our customers increasingly explore new, image-rich communication platforms as a means to break through the clutter. The acquisition is in line with our strategy of acquiring and producing increased amounts of relevant wholly-owned imagery."

The wholly-owned royalty-free content available through Stockbyte is a significant departure from the user-owned royalty-free content delivered through Getty’s other image service: istockphoto.

There is no question, Getty is busy. In addition to this transaction, earlier this year Getty acquired the parent company of Wireimage, which owned the largest celebrity photo and video archive. In March, it also, signed a partnership deal to license and distribute photos and video footage from Warner Brothers Entertainment’s archives. I wonder what is next on the shopping list.

After 6 months of dating, and tabloid-worthy rumors and speculation not far behind the kind of paparazzi press coverage Paris Hilton and Lindsey Lohan get, Tribune Co. today announced it had settled on a buyer. The newspaper and media giant will be sold to billionaire real estate investor, and local Chicagoan, Sam Zell for approximately $8.2b.

The share price for the purchase will be $34, a premium of approximately 6% over last weeks trading but in line with pricing from September, when Tribune Co. announced it was for sale. That price is less than the average 9.8x multiple of Price to EBIDTA for Tribune’s public competitors.

The transaction will occur in two tender offers, the first for 126m shares will close in the second quarter. The second, for the remaining shares will close in the fourth quarter. The company will borrow the money in two $4.2b increments to buy back the stock.  Merrill Lynch and JP Morgan will finance the deal.

Zell, who recently sold his Equity Office Properties Trust to Blackstone Group for $39b is personally investing $315m and will gain rights to a warrant entitling him to buy 40% of the company.   To reduce the debt load which, including borrowing for the purchase price, will exceed $14b, Zell has announced a plan to sell the Chicago Cubs baseball team at the close of the current baseball season.  It’s also a possibility that Zell will consider selling the LA Times property to Eli Broad and Ron Burkle, the LA-based investors who lost out in their bid for Tribune to Zell.

With Tribune a private company, Zell and his management team, will have a better situation to turn around the company than if it remained public.

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Last week Ticketmaster announced the purchase of a majority stake in Nashville based music marketing/fan-club/fan-ticketing company Echomusic.   The terms of the purchase were not disclosed.

Echomusic, which  provides musician fan-websites, marketing, sponsorship services and direct-to-fan ticketing, will help with Ticketmaster’s (a division of Interactive Corp.) efforts to move into broader promotion, and non-traditional ticket sales (resale, dynamic pricing, direct-to-fan).   It will also give Ticketmaster more tools for building relationships with bands and promotions and  that may increase revenue opportunities from channels beyond the ticket-fee charges that account for the bulk of their revenue.   (Ticketmaster earned $279.1 in revenue for Q4 2006, up 10% over ’05). 

Despite the benefits of the deal, the deal is, arguably, as much defensive  for Ticketmaster as offensive. Click to Read More

With rumors of mergers and acquisitions still swirling, Tribune Co. today sold the two smallest (by circulation) newspapers in its portfolio to Gannett. The Greenwich Time and the Stamford Advocate have modest readership but are in premium advertising market. (As much as any newpaper ad market could be considered premium in the currently difficult print ad marketplace.

At a sales price of only $73m, the transaction is small for Tribune but it fits with the company’s stated goal of liquidating at least $500m in non-core assets. The sale may or may not help with Tribunes ongoing effort to sell itself as a whole.

Getty Images, one of the dominant companies in the Stock Photo industry, and a company comfortable with growth via acquisition, announced it would acquire the holdings of MediaVast, Inc (the parent of photoservice Wireimage) for approximately $200m in cash. The deal will give Getty an increased archive of celebrity photos and video to add to its already vast library of images and video, including the royalty-free istockphoto.com that it acquired in 2006. (Wireimage owns the largest entertainment photo and video archive in the industry).

Wireimage will retain its photographers, executive staff and name. Wireimage and all of Mediavast’s other assets, which also include the Film Magic and Contour Photos business lines, will be incorporated in the editorial division of Getty’s business which focuses on providing images for new services.

The deal will likely close in the next two months but may draw some antitrust regulatory oversight or review before being completed.