Print based media companies continue to see a “firming” in performance as the third quarter of 2010 comes to a close. Most companies have seen two quarters of revenue stabilization and the majority of companies are seeing current revenues at or near the same level as 2009. The substantial revenue declines that occurred in late 2008 and throughout 2009 appear to have subsided, especially in mid and small markets, and media companies in those markets have adjusted expenses to meet current revenue projections. The result is that many companies are currently experiencing strong bottom line performance. The recovery is not uniform, however, as different markets and geographic areas have differing unemployment rates.
Some companies, especially those who entered the recession with little or no debt, are accumulating cash reserves. Those companies are beginning to look at acquisitions and have targeted market segments that best suit their strategic growth objectives.
However, companies that still have high debt to cash flow leverage multiples are closely monitoring operations and daily cash flows. Banking pressures continue on these companies as lenders work at cleaning up their own balance sheets and managing media debt that quite often falls in the problematic “high leveraged transaction” category. Some banks have been willing to “stand down” when it comes to pushing media clients who have triggered covenants into bankruptcy, while other banks have foreclosed on media companies. However, it has not been uniform and quite often those decisions have been made based on what is in the best interests of a bank at a given time.
Most newspapers are forecasting continued stabilization through the fourth quarter and are expecting that 2011 will trend stronger as the economy recovers.