Merger Mania
Categories: Banking
Big term coined in the '80s junk bond era. Debt was cheap, or at least easy to get. The Reagan-then-Clinton regulatory era loosened things. Big companies were able to buy small ones; small ones were able to borrow a ton of money and buy big ones.
One example:
The radio industry used to be highly regulated. In a given large market, like Miami or Dallas or Seattle, there were 5 or 6 competitors, and the average 30-second spot rate during drive time (7-9 am) sold for $175. But then regulations allowed for duopoly, i.e. where there were just two competitors in a market. So CBS-Infinity ended up being one competitor, and Clear Channel was the other. All the others were bought for high multiples, and the average drive time cost to advertise went from $175 to $300...fast. Hundreds of mergers just in the radio industry happened, and gave way to the catchy headline, noting the fine onomotopoeic use of the letter "m."