By: Lucia Moses
Last year was the slowest in a quarter-century for sales of daily newspapers, but this year’s action in mergers and acquisitions (M&A) could be fast and furious.
Actually, 2002 could be the most active M&A year in the industry ever, should the Federal Communications Commission rules barring ownership of newspapers and broadcast properties in the same market be revised or revoked by midyear, as expected. If the rules are killed, analysts say, expect to see newspaper companies try to make a killing by buying broadcast companies — or vice versa.
In the first quarter of this year alone, Dirks, Van Essen & Murray expects to announce deals whose dollar value will exceed that of all the deals done last year, said Owen Van Essen, president of the M&A firm based in Santa Fe, N.M.
Lenders’ conservatism and companies highly leveraged by earlier purchases combined to keep the deal flow low last year. After several years of active deal-making, a mere $209.3 million worth of dailies changed hands last year in acquisitions that were in most cases driven by clustering strategies, according to the M&A firm.
In addition to a number of public companies on the acquisition trail, Van Essen sees increasing interest in newspapers by financial players, which may stimulate activity this year.
“In tough economic times, investors rediscover the stability of the newspaper industry,” he said.
Those expecting to find bargains are likely to be disappointed, however, as prices paid for newspapers have, for the most part, held up through the downturn, brokers report.
Unlike the daily market, the weekly newspaper market remained strong last year and shows no signs of weakening this year.
John T. Cribb, president of Cribb & Associates in Bozeman, Mont., has eight separate deals involving weeklies or weekly groups set to close in the first quarter. Some of the prospective buyers are family-owned companies that aren’t overburdened by debt, Cribb said, so “those folks are in better shape to buy.”
Editor’s note: A complete listing of 2001 daily and weekly newspaper transactions, including brokers for the deals, can be found in the Jan. 7 print edition of E&P.