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?
Roland DeSilva: 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?
DeSilva: 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.