Stephens banker chimes in on media industry dynamics

Stephens Inc. investment banker Phyllis Riggins shares her thoughts on a variety of media-related dynamics altering the industry landscape. Riggins is managing director in the telecom and media division of the Little Rock-based investment firm.

Despite the decline in traditional newspaper revenue, Riggins says there are buyers for properties in the space.

There are some large newspaper operators serving as aggregators who are aggressively looking for acquisitions. Smaller newspapers are often owned by families who see educating and informing their communities as an important part of their legacy and commitment to those communities. And for a long time, the industry was very successful, so there wasn’t a lot of financial pressure.

As advertising revenue has shrunk dramatically, it has become obvious that they there is a need to improve the economics of the newspaper business. You can do that by attaining scale, both within geographies, as well as nationally. Scale and clustering create efficiencies buying newsprint and ink, consolidating printing and distribution of papers regionally and centralizing or outsourcing certain parts of the business. With scale, these buyers can also afford to leverage technology and add new revenue streams.

The days of a sale at 10 or 11 times cash flow are over, Riggins said. Read more of her Q&A at this link.