Are Weekly Newspaper Valuations on the Rise?
By: Mark Fitzgerald
For the first time in three years, the valuations for weekly newspapers are beginning to rise, says the newspaper brokerage firm W.B. Grimes & Co. Recently closed transactions have had multiples to cash flow of between five time to seven times cash flow “with several deals completed at the higher end,” Grimes says in its current newsletter.
“With revenues (and in many cases cash flow) increasing at most newspapers versus their 2009 lows, most buyers are beginning to consider the newspaper's performance over a multi-year period as opposed to just the trailing twelve months,” the Grimes newletter says. “Although full credit for 2007 and prior performance is rightfully not being granted, we are finding buyers (and their banks) more comfortable looking forward twelve months and making conservative growth projections. The net result, is some credit for past performance.”
Grimes says more buyers appear to be re-entering the market, “although it is still puzzling why most of the major groups remain on the sidelines shunning the smaller strategic acquisitions that made so much sense (and still do) for the past 20 years.”
Another broker with a speciality in community newspapers does not see the market quite so optimitically. John Cribb, managing director of Cribb, Greene & Associates, said he believes the valuations for weeklies will remain in the 4 time to 8 times area, with most deals in the 5 to 6 times EBITDA. “The number of deals may rise if we can get banks to loan money,” Cribb said.
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