Star Tribune Part Two: Why One Big Blowup Could Ruin It For Everyone

Print media is a tough business, and with recession-weary clients hurting for ad money, it’s an even worse time for PE firms to dive in. (Yet there are several media assets on the block…)

Some media-focused buyout pros believe that a major bust, like Avista’s deteriorating investment in the Minneapolis Star-Tribune, could ruin chances for doing deals in all types of print media.

“Lenders are saying, ‘Do not bring me any print deals. Anything with paper in it, we will not back.’” a media PE player told me.

This is troubling for those looking at print assets in growing, or at least stable and profitable sectors, like trade publications, those niche B2B pubs with a dedicated, built-in readership.

It’s like any turnaround professional says, of a potential target: “Does the business have a reason to exist?” For many (manymanymany) consumer-facing media outlets, unfortunately, the answer is “no.” But for the Coal Ages, or Plastics News,’ or Funeral Monitors of the world, there is a definite, specific demand for information and willingness to pay—a lot—for it. peHUB’s sister pubs, Buyouts and Venture Capital Journal, are perfect examples.

But with institutional lenders feeling skiddish after witnessing Avista stumble on Star Tribune or Willis Stein with Ziff Davis, the lending environment may get a tougher for the attractive targets. The good news is, this leaves the best deals for those able to finance on their own, either via mezzanine, co-investments, or with regional banks.