Youth marketing and retail play Alloy
continued its string of acquisitions with the purchase of YouthStream Media Networks’ Media and Marketing Services unit on Tuesday.
New York-based Alloy said it would pay $7 million in cash for the division of YouthStream, which sells out-of-home and school newspaper media at more than 8,000 high and middle schools and 2,000 colleges. Eight-year-old YouthStream, also based in New York, additionally organizes special college and high school events at which advertisers are featured.
Alloy plans to integrate the YouthStream group into its 360 Youth practice, another college-age-oriented play acquired last year by Alloy for $43 million. 360 Youth advertises clients through marketing alliances with college bookstores, student unions, dining services, residence halls, athletic centers and high school administrations.
Following what the company described as a “brief period of integration” with 360 Youth, Alloy said it expects the unit to add about $6 million to $7 million to its 2003 revenues, and $1 million in pre-tax earnings.
“The acquired assets add to our already strong out-of-home media, media placement and event marketing business units,” said Matt Diamond, Alloy’s chairman and chief executive officer. “This strategic acquisition further strengthens 360 Youth’s leadership position in assisting the nation’s premier brands in reaching the dynamic youth market.”
The move continues Alloy’s efforts to beef up its multi-channel teen and young adult marketing practices through acquisition. Last month, the company shelled out $48 million in cash for Market Place Media, a principally offline ad rep shop focused on marketing to minority groups and college-age military personnel.
In previous years, Alloy has swept up a number of youth-oriented communications, media representation and offline publishing firms to augment its homegrown business of promoting clients through on-site ads and printed catalogs.
For Alloy, the acquisition spree has served as a major driver of its relative success in the face of continued industry-wide weakness in both the online advertising sector and the e-commerce arena. During fourth quarter of 2001 and first quarter of 2002, the company posted a profit, in large part due to the strength of its ability to string together cross-media deals.
“We are leveraging our economies of scale and range of capabilities with media buyers to cross-sell our services, deliver more comprehensive marketing programs and capture a greater share of marketing dollars directed to the youth market,” Diamond said in March, of the company’s fourth quarter numbers.
On Monday, the company reiterated its goal to meet or exceed pro forma earnings of $1.5 million to $2.0 million. As of the end of April, the company reported $75 million in cash and marketable securities.
Following Tuesday’s sale, YouthStream said it plans to focus on its remaining retail business, BeyondtheWall, which sells posters at stores and on-campus sales events. It also said it would use the $7 million from Alloy to refinance debt and explore strategic opportunities.