Small and Mid-Size Newspapers Ripe for Picking

June 29, 2009

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Financial Services | Newspapers

Though small and mid-size newspapers have suffered fewer losses than big metro dailies, and many are “holding up well under the circumstances,” a study by brokerage firm Cribb, Greene & Associates found that some have put themselves up on the auction block for bargain-basement prices and are ripe for the picking.

Cribb, Green estimates that ad revenues at smaller newspapers are down between about 10% and 15%, compared with total newspaper industry revenues, which were down 16.6% in 2008 and 28.3% in Q1 09.? Despite some properties holding their own while cutting expenses, many smaller players are exploring joint ventures and partnerships and seeking buyers. The asking prices for such papers have never been cheaper, making some of them good investments in a “buyer’s market” the firm said.

“Many smaller newspapers can currently be purchased for between four and eight times their earnings before income tax, depreciation and amortization (EBITDA), said John Cribb, managing director, who points out that a few years ago, prices were between 10 and 14 times EBITDA, writes MediaBuyerPlanner.

Cribb does not believe that the future of the industry is as bleak as some industry-watchers suggest. “Conventional wisdom that the newspaper industry has failed is just plain wrong,” he noted. “Newspaper operators who aggressively pursue a disciplined acquisition model have the opportunity to create significant value in the next few years.

PricewaterhouseCoopers expects that newspapers will continue to suffer declines in total global revenue in coming years, losing a total of $25 billion by 2013 because of a steady decline in print ad revenue. Newspaper advertising will fall by a cumulative 32.7% throughout the next three years, but will begin to rebound in 2012, writes Editor & Publisher.

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