Media money moving into mobile

By Alexei Oreskovic - Analysis

SUN VALLEY, Idaho (Reuters) - The traditional media industry may be under fire as the weak economy crushes advertising spending, but companies and investors are scrambling to stake out territory in the new world of mobile content.

Media conglomerates, hardware makers and telecommunications carriers are all eyeing the nascent wireless media market, spurred by smartphones like Apple Inc's iPhone and Research In Motion Co Ltd's BlackBerry.

Highflying start-ups with strong mobile credentials, such as microblogging site Twitter, have increasingly become the subject of acquisition rumors even as their unproven business models mean a deal is unlikely at this week's Sun Valley media and technology conference organized by Allen & Co.

Bob Davis, partner and digital media specialist at venture capital firm Highland Capital Partners, said traditional media companies such as television networks will end up having to buy start-ups to gain the mobile expertise they need.

"I don't think they have the DNA to develop leading-edge applications in technology. They'll watch the market mature and buy into the winners," Davis said, adding that deals will take time in this economy and credit market.

There are signs that mobile deals are gaining steam. Mergers and acquisitions involving mobile media and technology jumped 46 percent in the first half of 2009 from a year ago, for a total of 16 deals, according to Jordan Edmiston Group. In contrast, M&A in the broader media, information, marketing and related technologies sector fell 30 percent.

Amazon.com Inc and IAC/InterActiveCorp, for example, both acquired companies developing iPhone applications this spring, and in June, Amazon bought mobile advertising service SnapTell.

Silicon Valley venture capital firm Kleiner Perkins Caufield & Buyers also announced in March a $100 million fund focused on start-up companies developing apps for the iPhone.