Transaction volumes fall by 40% and 60%
The newspaper industry isn't alone: Radio and television deal volume is down significantly in 2008 as well.
Based on announcements through the end of August, the volume of television deals was off by 60% compared with the prior year; in the radio sector, the volume of deals over the same period fell by 40%, according to BIAfn. Meanwhile, newspaper transactions were down 44%, excluding the 2007 mega deals: Tribune Co. and Dow Jones.
On an aggregate basis, the three traditional media industries are at very similar levels this year. The value of all television deals stood at $1.14 billion at the end of August, newspaper deals totaled $883 million and radio was $633 million, according to BIAfn and Dirks, Van Essen & Murray.
Some 59 broadcast televisions have changed hands this year, 529 radio stations and 13 daily newspapers.
The reason for slower activity is the same in all three industries. Credit market turmoil has made it difficult to finance deals. In addition, a soft advertising environment brought on by national recessionary trends has dimmed the near-term financial outlook of these companies.
“Until we get out of this financial crisis and the economy bounces back, we are going to see a lackluster number of sales,” says Mark Fratrik, research director at BIAfn.
Fratrik expects broadcast television revenue to finish 2008 flat with 2007, helped in part by strong advertising around the Olympics and the election this fall. Radio revenue should be down about 4% to 5%, he says. Both are better than 2008 expectations for newspapers at this point.
The majority of buyers for television and radio stations this year have been strategic acquirers looking to build larger geographic groups. The same has generally been true in the newspaper industry as well.