LIN Passed on Mobile Marketing M&A Deals Because They Were Too Expensive, CEO Says
LIN Media chose to build its own mobile marketing platform and hired an industry veteran to do it, after failing to identify a reasonably priced company in that sector to buy, CEO Vincent Sadusky said Thursday during the company’s Q4 earnings call. LIN has been investing in a mobile marketing platform so it can sell ads on its own properties and help its advertising clients place ads elsewhere on the Web and on mobile devices, he said. “We looked at several entities to try to buy and jump start that, given that mobile and social [advertising] are things we'd like to offer to clients,” Sadusky said.
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"M&A in that area is really hot right now, and we feel overpriced,” Sadusky said. “After several looks on the mobile side we just decided we'd build it,” he said. That means it will take more time to get going than if LIN successfully acquired an existing operator, he said. “It’s going to be a little slower to build, but much less expensive,” he said. “We made the build-versus-buy decision because of what we saw as an overheated … M&A market around mobile,” he said. In November, the company said it hired Kevin Wassong to run LIN Mobile,
Selling mobile ads today is akin to what the Web business was in its early days, Sadusky said. “It’s still getting advertisers to understand the business,” he said. “Right now they're getting a terrific value because there is not a ton of revenue."
Discussing the TV station M&A market, Sadusky said the company will continue to look at everything that’s for sale. And LIN would be willing to take on more debt to finance a deal if it finds the right one, as long as it sees a path to quickly recovering its investment, he said. “There are arbitrage opportunities” based on what LIN can offer in terms of technology, its cost structure and its retransmission consent deals with pay-TV distributors, he said. Other station groups are in a similar situation and any potential deal “really comes down to value,” he said.
Further consolidation is “really good for the industry,” whether LIN acquires more stations or another operator acts as a consolidator, Sadusky said. It will help broadcasters compete “more effectively in a media world that’s very concentrated in terms of programming and distribution,” he said.
Q4 sales at LIN increased 76 percent from a year earlier to $196.2 million on higher political ad sales revenue from stations it acquired during the quarter. It sold $45.5 million in political ads, bringing in more than twice as much as it did in the previous presidential election year, it said. It swung to a $58 million net loss from a $43 million profit a year earlier on a loss it took on equity investments.