B-to-b media companies are gradually starting to shift their focus from dealing with bank covenants to stabilizing their businesses and adjusting their portfolios, according to Kathleen Thomas, managing director of media investment bank Ber-kery, Noyes & Co.
Business pub-lishers are currently occupied with renegotiating their capital structures and less focused on shedding assets or acquiring new ones, Thomas said.
“There's a lot of cleanup taking place that we didn't see earlier in the year. ... Companies are getting back to basic blocking and tackling,” Thomas said. “We'll start to see [publishers] pruning their portfolios in 2010. It won't be back to double- digit multiples, but we'll start to see deals happening.”
Thomas said it hasn't been for lack of trying that the M&A market has remained moribund since the economy cratered late last year. “For the past 12 months, nobody with a healthy company has been willing to sell at valuation levels that buyers were willing to buy at,” she said.
She added that she is now seeing “glimmers of hope” in media M&A activity but still expressed caution. “With cleaned-up business structures, bids [for media properties] will tighten and we'll start to see more transactions,” she said. “The conversations are starting to be more positive.”