Roland DeSilva is managing partner of media investment bank DeSilva & Phillips.
Media Business: The aggregate value of media M&A deals fell in the first quarter, according to reports. What is the outlook for the second quarter?
It's going to remain flat. The activity in the M&A market is taking place in the digital space more than anything else. That's where we'll see some reported activity. And there are some larger deals that will happen. For b-to-b media companies with a lot of print exposure, you may see one or two of those deals be reported in the second quarter. But I fully expect the second quarter not to be robust in that area.
MB: How is the credit market affecting the activity for midmarket media deals?
It's according to what the media deal is. If you go back to print and start at the low point there, you're getting two (times)-to-two-and-a-half-times senior debt, if it's a valuable property and it's in a transition to digital media. As you go up the scale and you find more digital media, your lending starts increasing for middle-market deals. You can go as high as four times-to-four-and-a-half-times senior debt. That's what's driving the multiples. The lower the leverage, the lower the multiple on EBITDA for properties.