Why merger mania amidst the media meltdown?

MediaWeek reports that there has never been a better time for mergers and acquisitions in media:

“The first half brought 399 announced deals of $75.9 billion, exceeding the $60.6 billion value of the 637 deals that were announced in all of 2006, according to a report by . . . the Jordan, Edmiston Group, a New York-based investment bank that tracks M&A activity.”


Meanwhile, Goldman Sachs warns investors “that no relief is in sight for the (newspaper) industry’s woes.” A summary of the report in Editor & Publisher quotes analyst Peter Appert on the unexpected drop in current and forecast advertising revenues:

“The magnitude of the recent declines is extraordinary for a non-recession period and provides concrete evidence, in our view, that the share shift from print to online in the publishing industry is accelerating . . . and that the transition period from print to online will be ‘painful’ and ‘extended’ . . . (and that it) will take as long as five years for online revenues to offset deteriorating print revenue.”

I guess the media investment motto is: no capital gain without labor pain. If you, like me, are labor, I hope this understanding makes this “extended” period more tolerable. Incidentally, Goldman says that, with the exception of Rupert Murdoch’s recent bid for Dow Jones “ the transactions have not been that valuable for shareholders.”

So why is this happening?