Noisy Birth and Quiet Death in France - Dec. 2006
The headline yesterday that Paris-based Publicis buys Digitas signaled a huge, watershed moment.
The $1.3 Billion sale price was 21 times EBITDA and more than 3 times revenue. Publicis Groupe stock rose 2% on the news. Publicis Chairman-CEO Maurice Levy tells Online Media Daily that "The massive shift from old media to new media is leading to a new world, and we don't want to be on the sidewalk".
What does this signal?
1. Valuations for internet businesses are still quite strong...signalling more upside than the 2002-2005 period. This time around, valuations are based upon real revenue, earnings and strategic importance.
2. Levy thinks that bigger is better, especially when negotiating with gigantic media properties like Yahoo, Google, MSN and others. It's a model that has worked during the last century for advertising agencies and there's no reason to think that it won't now.
3. There will certainly be winners and losers as the internet continues to develop, mature and deepen it's roots in societies around the globe. Losers are old thinking, old media and old capabililties.
And in a far quieter and Far Side sort of way, we still know that the French can still make waves in the digital world. In 1982 they launched Minitel, a pre-cursor to the modern day internet, which will cease service in a few short days on Dec. 31, 2006. 25 million French used it to check stock prices, make train reservations and buy goods and services online...spawning start-ups just like internet-based ones.
This will be the first of the successful digital media to expire.
The $1.3 Billion sale price was 21 times EBITDA and more than 3 times revenue. Publicis Groupe stock rose 2% on the news. Publicis Chairman-CEO Maurice Levy tells Online Media Daily that "The massive shift from old media to new media is leading to a new world, and we don't want to be on the sidewalk".
What does this signal?
1. Valuations for internet businesses are still quite strong...signalling more upside than the 2002-2005 period. This time around, valuations are based upon real revenue, earnings and strategic importance.
2. Levy thinks that bigger is better, especially when negotiating with gigantic media properties like Yahoo, Google, MSN and others. It's a model that has worked during the last century for advertising agencies and there's no reason to think that it won't now.
3. There will certainly be winners and losers as the internet continues to develop, mature and deepen it's roots in societies around the globe. Losers are old thinking, old media and old capabililties.
And in a far quieter and Far Side sort of way, we still know that the French can still make waves in the digital world. In 1982 they launched Minitel, a pre-cursor to the modern day internet, which will cease service in a few short days on Dec. 31, 2006. 25 million French used it to check stock prices, make train reservations and buy goods and services online...spawning start-ups just like internet-based ones.
This will be the first of the successful digital media to expire.
posted by Brett Knobloch at 12/22/2006
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