Lack of financing curtails transactions
Publishing sales activity in 2008 was driven by the buyers’ ability to secure financing and was almost exclusively in mid and small markets. Large metro market publications and/or substantial blocks of smaller papers went unsold because the financing was not available for large dollar transactions.
Cribb, Greene & Associates closed 15 different transactions in 15 different states involving 7 daily and 50 weekly publications in recent months. All of these sales were in mid and small markets.
As financing became more difficult and the year wore on, the buyer pool thinned in 2008. However, there remain many media companies with strong balance sheets heading into 2009 that want to grow through acquisition. Their ability to secure financing under reasonable terms will be the key to their future growth.
Local and regional banks with strong ties into their markets have been more willing to lend for newspaper acquisitions. Struggling, larger banks have become risk adverse and are pulling away from newspaper lending because of the downturn in advertising and what they see as the transitional nature of the industry.
The backlog of solid publishing companies to be sold continues to grow, especially in large markets. There are buyers for many of these companies but there will be few sales until the credit markets unlock. In the meantime, larger newspapers will continue their struggle in 2009, while mid and small markets will hold their own in the face of a declining advertising market.