Newspaper properties are selling at a rate you’d expect to see before the 2008 crash in values, and selling to a diverse crowd of buyers.
But brokers report that this relatively high level of activity may slow in the coming year as buyers become more demanding about the strategic value of an added newspaper—and increasingly alarmed about the performance of newspapers in general.
“There are currently a good number of newspapers on the market, and the sale activity is pretty high,” said John Cribb of Helena, Montana-based Cribb, Greene & Cope. “We think buyers are tightening down somewhat, and are becoming more picky about papers that lose money, significantly discounting these as ‘projects’ that can be hard to fix.”
Buyers are concerned, he added, about the downward trajectory of newspaper revenue.
It’s a trend also noted by Larry Grimes of Gaithersburg, Md.-based W.B. Grimes & Company.
“The bigger issue is that newspapers are not doing particular well,” he said. “Buyers are discouraged. Newspapers seem to be looking more for exit strategies than acquisitions.”
Grimes & Company did many newspaper property appraisals throughout 2017, and didn’t come across a single operation that was trending positively, he said.
Yet, there are clearly eager buyers out there.
Philip W. Murray of Santa Fe, N.M-based Dirks, Van Essen & Murray noted that the number of daily newspaper transactions—29 of them through November—is about the same level as in the years approaching the Great Recession.
The 29 separate transactions involved 72 dailies and totaled $227 million, Murray said. That’s in line with the 28 transactions totaling $198 million in 2016, and the 27 transactions in 2015.
One interesting aspect to 2017 newspaper deals is how many different buyers they attracted, Murray said.
“People have this impression that it’s a small group that’s out there buying newspapers,” he said. But there have been 16 different buyers involved in the 2017 transactions through the third quarter.
Similarly, the sellers are still a fairly diverse group. Some families are leaving the business after three or four generations of ownership because they haven’t been able to achieve the economies of scale to sustain their enterprise, and some because the next generation simply isn’t interested in being publishers. But Murray notes that Civitas Media, which shed its fairly substantial newspaper holdings in 2017, is a private equity firm.
While diverse, buyers do have one thing in common, though: They are buying strategically. Newspaper buyers are almost always making acquisitions to add to their existing clusters, said Murray and other brokers.
If the buyers are different, so are the values attached to the properties, brokers agree.
“It’s hard to talk about multiples because so much depends on the individual situation,” Murray said.
Grimes is blunter: “Multiples are not the drivers any more. Because nobody really know what’s (a) fair (multiple) or not.”
For those willing to buy, banks are willing to lend, and at fair rates. The days when bankers perceived newspaper properties as toxic are now gone, brokers agree.
Grimes for one sees the current sales environment as a lost opportunity for reluctant buyers: “It’s a real shame because newspapers have opportunities to pick up a valuable asset—and at rock-bottom prices.”