Staff, Media Week, 07 October 2008, 07:30am

Finance and the media

LONDON - Just a year ago, investors were queuing up to buy media companies. Fuelled by access to cheap debt, the likes of Quadrangle and Cinven were reportedly vying with £1bn-plus offers to buy Emap's consumer magazines arm.

ITV was rebuffing Apax Partners' advances and Providence was circling Virgin Media.Fast forward to today, and with the credit crunch sucking the life out of many private equity firms, there are not so many would-be buyers out there. The valuations of media firms, private and public, have tumbled.

"There was a lot of bid froth in many media companies' valuations," said Lorna Tilbian, media analyst, Numis. "That credit has largely run dry and that is hard to bear for some companies."
However, the downturn affects all media companies, adds Tilbian, and not just those seeking investment: "Every company needs liquidity to buy things and deal with creditors."

The consensus is that consolidation is likely. "Some companies will not be able to refinance loans, so they could try and sell themselves," adds Tilbian. "However, will there be buyers? The only option for some could be consolidation."

Some are concerned that the media industry may lack the expertise to navigate the downturn.
"This is an interesting time for most managers in the media," said Tim Ewington, founding director of Human Capital. "The last recession was 15 years ago, so not a lot of media executives have experience of dealing with a recession."

But, according to some, there are still deals to be made. "Private equity is still there and we are working on deals with big private equity players," said Ben Tolley, director, Clarity Capital Partners.