| |||||||||||
| |||||||||||
This news isn't exactly earth-shattering. Dealscape noted last month that the number of middle-market M&A deals in the media sector in May 2009 decreased when compared with the same period a year ago. So, why the expected slowdown in overall M&A into 2010? Buyers, it seems, are leery of target's shaky cash flows due to the slowdown in ad spending coupled with high debt loads. A prime example is the New York Times Co.'s (NYSE:NYT) Boston Globe unit, which is currently on the auction block. The Globe lost $50 million last year and could lose a reported $85 million this year. Additionally, it has a high cost structure that its declining advertising base can't support. Louis Kenna, co-head of media and telecom finance at BNP Paribas SA, told Reuters that sales would likely happen in situations where companies simply ran out of options and were forced to sell, leaving eager private equity shops to possibly purchase a distressed asset. If that didn't happened, the other scenario is to close shop, or file for bankruptcy."When a company runs out of cash ... the banks say 'Let's sit down around the table.' But it's too late," Kenna told Reuters. "It's at this point that an Oaktree, an Apollo, a TowerBrook will have been doing their homework ... and will walk in." That's a dire scenario that could play out for the Times. It has some cash but may not have enough to ride through a prolonged advertising slowdown as it deals with its massive debt payments. Several parties that include PE firms have shown interest in the Boston daily, but no offers have been made. - Gerald Magpily See Dealscape: Midmarket media M&A sluggish in May
CategoriesContributed content from Middle market video
Categories
Blog roll
Archives
| |||||||||||
Despite some recent media deals that include News Corp.'s (NYSE:NWS) 
|
|
|
|
|
