By: E&P Staff The prices buyers are willing to pay for newspapers remain "depressed but seem to have bottomed out," broker Larry Grimes reports in his newsletter Tuesday.
Multiples that buyers are willing to pay for daily newspapers now range between five and seven times EBIDTA (earnings before interest, depreciation, taxes and amortization), according to Grimes, president of Gaithersburg, Md.-based W.B. Grimes & Co.
Weeklies are finding buyers at five to eight times EBITDA, he added.
"Several factors continue to weigh down multiples, driven to a large extent by the continued lack of bank financing (or at least under reasonable terms and conditions), a weak advertising environment, and the high profile-much ballyhooed struggles of many larger big city dailies and their overleveraged parent companies," Grimes wrote.
However, more banks are beginning to lend, especially if they received funds under the federal TARP (Troubled Asset Recovery Program). Buyers should expect to pay a down payment of 20% of the newspaper's price, Grimes said.
Not surprisingly, the broker argues that this is a buying opportunity time, especially for publishers who can cluster papers.
"If one believes in the adage 'buy low, sell high,' we are probably in a once in a generation market for buyers," Grimes wrote.
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