Monday, April 6, 2009
I have received some calls asking about the KMVN deal in Los Angeles. Grupo Radio Centro is entering into a long term (up to seven years) LMA for $7 million per year. GRC has the right to purchase the station for $110,000,000. http://finance.yahoo.com/news/Emmis-Enters-Into-LongTerm-prnews-14847726.html
While the price is well below the high water market for a Los Angeles stick ($250,000,000), I believe that the price represents current fair market value. Here's my take. I look at stick deals through a technical lens, specifically an analysis of the population covered by the station's 60 dBu contour. Once you know the pop count, you can then apply a multiple. We have studied years of stick deals, and this model stands the test of time. Though I should point out that the appropriate multiple moves up and down with marketplace and credit conditons.
According to BIA, KMVN reaches some 14.664 million people in its 60 dBu contour. Divide that into the $110 million purchase price yields a "cost per pop" of $7.50 (almost to the penney). That number is the lowest in a long time, and a couple of bucks lower than the last FM deal in LAX. It is probably one-third of the high only a few years ago. But it accurately reflects today's marketplace. Both parties made a "fair deal."
That's my opinion; what's yours?