Newspaper M&A Activity On Hold

By: Lucia Moses

Like marketeers, would-be sellers of newspaper properties seem to be holding out for the end of the war and signs of better economic times.

Sales activity is “greatly overshadowed by uncertainty over the economy,” said Philip W. Murray, senior vice president of the Dirks, Van Essen & Murray brokerage in Santa Fe, N.M. “We’ve talked to people who are thinking about it and want to wait and make sure nothing catastrophic happens.”

Judging by the merger-and-acquisition activity so far this year, though, 2003 is likely to beat last year’s sales total. In the first quarter, three deals involving 18 daily newspapers and $350 million were announced, according to Dirks estimates. (This includes a partnership pact that would give Gannett Co. Inc. control over five MediaNews Group Inc. dailies.) In contrast, Dirks counted 38 dailies changing hands in transactions totaling $1.2 billion in all of last year.

The impression, however false, that the economic slump has depressed multiples also has held back sales activity, observed John T. Cribb, principal broker with Cribb & Associates in Bozeman, Mont. “Buyers and sellers still don’t seem to understand that prices did not fall off much,” Cribb said, adding that sales of small dailies and weeklies, which tend to be insulated from downturns, remain brisk. “I think that kept a lot of the good properties from coming on the market.”

Brokers anticipate stronger second-half activity, assuming the economy picks up. They expect to see among the buyers not only publicly traded newspaper companies but also privately held groups that have little debt and are well-positioned to buy — such as the family-owned Brown Publishing Co., which agreed in February to acquire 11 dailies from Community Newspaper Holdings Inc.

Other factors that could drive activity this year: the possible relaxation of federal media cross-ownership rules and a sale of Freedom Communications Inc., now exploring options for its 28 dailies.

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