Analyzing media mergers: Current trends, valuations, and future outlooks
Navigating the complex landscape of media mergers is essential for the future of the local news industry. Mergers and acquisitions (M&A) play a vital role in the evolution of the industry, presenting both challenges and opportunities for strategic growth and sustainability.
In a recent discussion, Sara April, the president of Dirks, Van Essen & April, and John Thomas Cribb, the director of Cribb & Associates, shared their insights on current trends in media valuations, the impact of digital transformation, and key strategies for individuals interested in buying or selling media organizations.
Despite economic uncertainties, media valuations have remained steady in recent years. The disruptions caused by the COVID-19 pandemic have leveled off, leading to a stabilization in transaction values. April highlighted that valuations have remained consistent in 2024 compared to 2023 and are expected to continue in the same trajectory the following year. Cribb emphasized that the embeddedness of a newspaper within its local community contributes significantly to its valuation. Papers with strong community ties and a vibrant franchise can command higher valuations, underscoring the importance of local connections.
Digital transformation has been a pivotal factor influencing M&A deals within the news publishing sector. Buyers are now evaluating the impact of digital innovation on acquisitions. While some buyers see digital advancements as essential for future revenue growth, others prioritize the core fundamentals of local journalism. Some buyers assess progress in the digital space, while others focus on implementing their own strategies. Digital subscription models also play a crucial role in decision-making for certain buyers, with some scrutinizing digital-to-print subscription ratios before proceeding with a deal.
The landscape of media acquirers continues to evolve, with a diverse array of buyers ranging from major media groups to independent local entrepreneurs. Carpenter Media Group emerged as the largest acquirer in 2024, following a trend of dominant buyers in previous years. Private equity firms, local entrepreneurs, and strategic buyers are also actively participating in media acquisitions. Independent local buyers are recognizing the community value of publications and are focused on sustaining them for the long term.
The motivations behind selling a media company vary widely, from retirement to portfolio balancing. For some owners, selling is a natural transition as they prepare for retirement or reallocate their investments. Family-owned newspapers where the next generation is not interested in continuing the business often seek buyers who will preserve their legacy. Portfolio balancing is another significant factor driving sales, allowing companies to exit certain markets and reinvest in others that align better with their strategic goals.
Despite ongoing discussions about economic uncertainty and inflation, the media M&A market has remained resilient. The economic climate has not had a major impact on transactions, with a stable deal flow continuing into 2025. Advertising revenue stabilization and growing subscription models have contributed to a healthy market outlook for those considering a sale.
Owners contemplating a future sale need to prepare diligently for the process. Cleaning up financials and ensuring clear, accurate financial records are crucial steps in readying a business for sale. Strong top-line revenue is equally important, as buyers seek financially sound businesses that they can trust. By taking these steps, owners can position themselves for a successful sale when the time comes.
