Report: RIM balks at deal for Millennial Media

Baltimore mobile ad firm reportedly asked for up to $500 million to sell to BlackBerry maker

August 19, 2010|By Gus G. Sentementes, The Baltimore Sun

Millennial Media, the Canton-based mobile advertising firm, was reportedly in talks to be acquired by Research in Motion, maker of the BlackBerry, but negotiations stalled over pricing for the Baltimore company.

Millennial has said in the past that it is considering a public stock offering as an independent company. The private company ranks as one of the largest mobile ad firms in the nation. Citing anonymous sources, The Wall Street Journal on Thursday reported that Canada-based Research in Motion, or RIM, had been in talks with Millennial in recent months.

Over the past 10 months, Google Inc. and Apple Inc., two major competitors in the mobile device market, have paid hundreds of millions of dollars to buy rivals of Millennial. Some analysts believe RIM may be trying to buy an established mobile ad network to support its BlackBerry devices and growing mobile applications store.

"I think RIM is trying to play catch-up to what Apple and Google are doing," said Scott Sutherland, a technology analyst and managing director with Wedbush Securities in San Francisco.

Millennial was asking for $400 million to $500 million, a price that RIM was unwilling to meet, according to The Wall Street Journal report.

Officials with RIM and Millennial declined to comment.

"We don't comment on rumors or speculation in the market," said Mack McKelvey, Millennial's senior vice president of marketing, in an e-mail. "We are continuing to execute on our plan."

This latest report would be the second time this year that Millennial has been at the center of acquisition speculation. In April, Business Insider, an online news site, reported that Microsoft Inc. and Millennial had been in negotiations over a possible deal, which has not materialized.

Sutherland said that Microsoft, RIM and Nokia, a major cellphone maker, may all be thinking about buying a mobile advertising firm to ensure that they can continue to compete with Apple and Google in mobile devices.

Online advertising has been a robust market for years, totaling upward of $24 billion last year. But as smartphones — from Apple's iPhone to RIM's BlackBerry to Google's Android — have proliferated, the devices have helped to expand the reach of the Internet to consumers with mobile devices.

The Interactive Advertising Bureau has projected that the mobile ad industry will grow from $416 million in 2009 to $1.6 billion within three years.

Mobile ad networks have proven to be an important chess piece for major technology companies that are crafting strategies around cellphones and smartphones, and consumers' skyrocketing Internet use with the portable devices. Millennial, which touts itself as reaching 82 percent of the mobile ad audience, has seen two of its top competitors get acquired recently.

In November, Google acquired AdMob, a Millennial rival, for $750 million. Then, in January, Apple said it would buy Quattro Wireless, another Millennial rival, for $275 million.

Millennial has attracted approximately $40 million from investors since its founding in 2006. Investors include Acta Wireless, New Enterprise Associates, Columbia Capital, Bessemer Venture Partners and Charles River Ventures. The privately held company does not disclose financial figures.

The company said it is using its investment capital to expand its operations and reach in the marketplace. The company currently has about 85 employees and expects to grow to about 110 next year. Millennial also has offices in New York, London, Chicago, Los Angeles, San Francisco and Atlanta.

"We just hired 10 people in our technology group," McKelvey said in an interview with The Baltimore Sun last month. "We grew staff last year 51 percent."

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