Smaller properties worth considering

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Larry Grimes, president of Gaithersburg, Md.-based media investment bank W.B. Grimes & Co., doesn't understand why buyers-both strategic and financial-are so fixated on making large media acquisitions when there are so many smaller properties ripe for the plucking.

"With the deal flow in 2004 turning out to be much slower than we in the industry had expected," Grimes said, "it's puzzling to me why buyers are still mainly thinking big." When he and his team have approached would-be buyers with healthy, albeit smaller niche properties, they've met with resistance. "They're telling us that they're worried about the ability to grow a given niche," he said.

Grimes said that often buyers need to step back and look at the many sound reasons niches were developed in the first place. "But even when they do acknowledge a niche's strengths, they sometimes think they can stretch their existing properties to cover the niche," Grimes said. "But doing that can take as big an investment as acquiring the property itself, not to mention that they still would have to compete against it."

Another factor hampering sales of smaller media properties is the lack of financing. "If you're a buyer and want to get the attention of Wall Street lenders, the deals will have to at least start at $20 million," Grimes said.

-Roger Slavens

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