By: Lucia Moses Newspaper, Financial Execs Say Time Is Ripe To Buy
After climbing for three years, prices paid for newspapers may have
peaked, a survey of newspaper and financial executives suggests.
Today's dailies are valued at a multiple of 10 to 14 times cash flow,
up from nine to 10 times cash flow in 1997. For weeklies, the multiple
has risen to eight to 10 times cash flow from eight to nine times cash
flow in the same period, according to the survey by AdMedia Partners
Inc., a New York investment firm.
Despite rising prices, industry executives anticipate continued merger-and-acquisition (M&A) activity this year and 81% say the time
is ripe to buy, the survey shows.
Low interest rates, plentiful funds, and attractive properties help
offset the high prices, AdMedia Managing Director Charles Wrubel
wrote of the results.
But these prices may not last, as 82% of respondents would encourage
prospective sellers to act now. 'This is evidence many believe prices
have peaked and sellers shouldn't miss the opportunity,' Wrubel wrote.
The survey carried out in December revealed 34% of newspaper industry
executives expected an increase in M&A activity this year, 52%
anticipating activity to stay the same, and just 14% foreseeing a
decrease. The year, of course, got off to a gallop, with deals
involving more than $11 billion worth of U.S. newspapers announced
already.
AdMedia's annual survey was based on the responses of 800 executives,
32% of whom said newspapers were their primary business.
The mood of respondents in all media sectors has changed from a year
earlier, when 25% predicted a slowdown in M&A activity due to fears
of recession or correction.
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Lucia Moses (lmoses@editorandpublisher.com) is associate editor for E&P.
(c) Copyright 2000, Editor & Publisher
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