Banks may lose faith in advertising-led media industry

Banks could be less enthusiastic about lending to finance the media industry in the future if current Emap acquisitions do not pick up soon, it has been reported.

The magazine giant recently made an acquisition of both Apax Partners and the Guardian Media Group (GMG) but the lenders, who provided funding for the £1.26 billion deal, are now facing tough times.

The lenders are facing turbulence thanks to a drying up of advertising funds; a knock-on effect of the economic crisis currently affecting the US and Europe.

Speaking to the Times newspaper about the possible future lack in confidence regarding the funding of advertising-reliant media deals, one source said: "The Apax and GMG acquisition was agreed back in December [2007] when the advertising and lending market were in a very different place."

Such a lack in interest from the banks could see a rise in demand for marketing executives in the media industry, who will need to be capable of drawing support from reluctant banks in the face of future deals.

The news comes as publisher Reed Elsevier announced it is to sell its business-to-business publishing arm.

Business-to-business publishing is heavily reliant on advertising, and so comes as a 'canary down the mine' warning to what could become of traditional media outlets.

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