Will you be in Nashville next week for the NRB or the CRS?

If you plan to be in Nashville next week for the NRB (http://www.nrbconvention.org/) or the CRS (http://countryradioseminar.com/) and would like to get together, please let me know.  I plan to arrive on Tuesday.

Looking forward to catching up,

George
Media Services Group

Link to Tom Taylor's story today on station trading

Tom Taylor shared some views of the 2015 radio station trading market from Larry Patrick and me in this morning's "Tom Taylor Now."

Inventory.

George
Media Services Group

MSG Announces Sale of Free Lance-Star Radio Stations

Here is the press release about the sale of the Free Lance-Star stations in Fredericksburg, VA.  We are please to have represented the seller in this transaction.

FREE LANCE-STAR STATIONS TO BE SOLD

Free Lance–Star Publishing LLC announced Friday that it is selling its four radio stations to Alpha Media of Portland, Ore.

Alpha has agreed to purchase WFLS–FM, WNTX–AM, WVBX–FM and WWUZ–FM, pending approval from the Federal Communications Commission. Terms of the deal were not disclosed.

Sandton Partners, which purchased The Free Lance–Star in a bankruptcy auction in June, announced late last year that it would sell the Fredericksburg-area stations after being directed by the FCC to divest itself of either the newspaper or its Star Radio Group holdings. “We are proud to have been owners of the Free Lance-Star radio properties,” said Robert Orr, managing director for the company.

“The transaction with Alpha Media gives us great comfort in knowing that the stations will be in very capable hands, and that listeners in the Fredericksburg area will continue to benefit from the excellent entertainment and news programming that they have come to expect from us.” Free Lance–Star and Star Radio Group Chief Executive Officer Gene Carr said Alpha has agreed to keep all employees of the stations, which will continue to operate from the FLS building on Amelia Street. “The staff are an integral part of serving the listeners and advertisers of the Fredericksburg region; I am pleased that the entire staff will be offered employment with Alpha Media,” Carr said.

“We will continue to operate the Star Radio Group until FCC approvals have been finalized and we look forward to seeing the continued growth of these radio stations,” he added. “Alpha Media has an excellent reputation in the industry.”

When completed, the deal will give Alpha a total of 93 radio stations across the country.
“Fredericksburg is a thriving place that continues to grow. It will be a nice addition to our East Coast footprint,” said Alpha Media Chairman Larry Wilson. “I feel privileged to be able to get into that market and work with the great people there.”

In addition to the radio stations; Alpha Media owns the digital media and marketing company Xapsis in Peoria, Ill., and two performance venues, Bing Lounge in Portland, Ore., and Alamo Lounge in San Antonio, Texas.

George Reed of Media Services Group brokered the deal.

Reed Bunzel Launches Radio 2015: The Year Ahead

Veteran radio writer and analyst Reed Bunzel today launched Radio 2015: The Year Ahead, a comprehensive analysis of the U.S. radio Industry. Researched and published by Bunzel Media Resources, Radio 2015: The Year Ahead is designed to help radio broadcasters successfully manage their businesses as traditional industry operations collide with new, disruptive technologies and emerging competitive forces.

The main thrust of this project is a quarterly report that will feature exclusive (and original) reports on the following sectors of the radio business:

• Economic Indicators 
• The Radio Economy 
• Mergers & Acquisitions 
• Digital Disruption 
• The Radio Listener Redefined 
• Impact Issues (Part 1 and Part 2)
• Q&A With Radio's Leaders (Part 1 and Part 2)

Each quarterly report is available on the Bunzel Media Resources website as PDF files that can be read on-screen or downloaded.  

I shared a few of my own thoughts about the station trading marketplace and values for the Mergers & Acquisitions section.  Best wishes for your new project, Reed.

George
Media Services Group

Sale of WMUV and WSOS in Jacksonville closed yesterday

Delmarva Educational Association has completed the acquisition of the assets of radio stations WSOS-FM and WMUV-FM, serving the Jacksonville, Florida market from Renda Broadcasting Corporation. 

Congrats to Stuart Epperson (for buyer) and Tony Renda (for seller). 

I represented the seller in this transaction.

George
Media Services Group

R.I.P. Bill Burton

Eric Rhoads wrote a fitting tribute to Bill Burton for Radio Ink's Ink Tank.

George
Media Services Group

Alpha Media to purchase Access 1 Communications radio stations in Shreveport and Tyler-Longview

For Immediate Release: December 22, 2014
Portland, OR
Contact: Randi P’Pool
Direct: 503-517-6376

Alpha Media of Portland, Oregon announced today they have entered into a definitive agreement to purchase radio stations from Access 1 Communications. Access 1 Communications owns nine radio stations; five stations located in Shreveport, Louisiana which include KBTT(FM), KOKA(AM), KDKS(FM), KLKL(FM), KTAL(FM) and four radio stations in Tyler-Longview, Texas; KKUS(FM), KOOI(FM), KOYE(FM) and KYKX(FM). Alpha Media will begin operating the Access 1 stations under an LMA starting January 1, 2015.

Larry Wilson, Chairman of Alpha Media will add the Access 1 clusters to the seventy stations (which include two under LMAs) currently in the Alpha Media portfolio. When all pending deals are completed, it will bring the total number of stations owned by Alpha Media to eighty-three (this includes the pending acquisition of six California stations). Commenting on the acquisition, Wilson said, “I’ve known Chesley Maddox-Dorsey for a long time. She’s a great person with superb integrity and it’s a tremendous honor for us to be buying stations from Access 1. I’ve been continually impressed with the quality of people I’ve met and their passion for the industry; it fits right in our sweet spot for live and local radio and we are very much looking forward to the acquisition.”

Chesley Maddox-Dorsey, President and CEO of Access 1 Communications said, “Larry Wilson continues to display the dynamism that has earned him the best in class title for our industry. With our sale to Alpha Media, our employees, listeners and advertising partners in East Texas and Shreveport, Louisiana will have the opportunity to work with a visionary group of media professionals with a demonstrated track record of success. We are thrilled that we could pass our baton to this incredibly imaginative company that will maintain that intimate connection with listeners and advertisers that we have come to cherish.”

This transaction will be filed with the Federal Communications Commission shortly and is subject to their approval.

Alpha Media, headquartered in Portland, Oregon owns and operates 68 radio stations and 2 additional stations under LMAs in 12 markets across the United States covering all formats including Top 40, Adult Contemporary, Spanish, Urban, News Talk, Sports, Rock, Country and more. In addition to the radio stations; Alpha Media owns the digital media and marketing company; Xapsis in Peoria, Illinois and the intimate performance venues, Bing Lounge in Portland, Oregon and Alamo Lounge in San Antonio, Texas.

I represented the seller.

George
Media Services Group

WEZV-FM, WYEZ-FM and WGTN-FM (Myrtle Beach) Sold

PRESS RELEASE
December 22, 2014

WEZV-FM, WYEZ-FM and WGTN-FM (Myrtle Beach, SC) have been sold by Fidelity Broadcasting Corporation to Compass Radio Group LLC for $1,600,000. Fidelity is headed by Jerry Bresson and Compass by Bob Woodward (55%) and John Trent (45%). Compass is already programming the stations under a Time Brokerage Agreement.  The sale is subject to FCC approval.

WEZV-FM (Easy 105.9), North Myrtle Beach, is a Class C3 on 105.9 MHz with 17 kW @ 361’. It is simulcast on sister WGTN-FM, known as Easy 100.7. WGTN-FM is a Class A with 3.1 kW @ 446’.
WYEZ-FM (Movin 94.5), Murrells Inlet is a Class C3 on 94.5 MHz with 12 kW @ 476’. The format is Rhythmic Oldies.

I represented the seller.

George
Media Services Group

Entercom buys Lincoln Financial Media for $105 million

Here is the Press Release.

George
Media Services Group

Waterloo Closes

NRG Media, LLC has completed the acquisition of the assets of radio stations
KFMW-FM, KOKZ-FM, KWLO-AM, and KXEL-AM, Waterloo, IA from Woodward Communications Inc. The purchase price is $3,550,000.

Jody McCoy of Media Services Group’s Colorado Springs office was the exclusive broker representing the seller in this transaction.

For more information:

Jody McCoy
719.630.3111
jbmccoy@MediaServicesGroup.com

Welcoming Bill Cate to Media Services Group

I got into the brokerage business in 1987 after working on the station side for many years.  Bill Cate hired me at Chapman Associates and provided great training on "how to be a broker."

With that bit of history in mind, I am delighted to announce that Bill is joining Media Services Group.  We have now truly gotten the old band back together.

The formal press release stated, “He brings with him a background of station ownership, as well as 36 years of media brokerage.  Bill is the former co-owner and president of Chapman Associates, and brings a wealth of knowledge to our group.”  

About joining our team, Bill added, “I am extremely pleased to be joining Media Services Group. Many of the partners go back to my days with Chapman Associates, and it’ll be great to be back working with them. I believe there is strength in numbers, and Media Services Group offers the widest diversity of brokerage services to our industry. I look forward to the affiliation and believe it will enable me to better serve my clients with greatly expanded resources, much more than operating as a standalone media broker.”

Bill will continue to work out of the Little Rock area.  You can contact him at:

501.727.5100
Cate@MediaServicesGroup.com

George

Media Services Group

See you at the Radio Show!

The Media Services Group suite is number 325 at the Westin in Indy. 

#RadioShow2014

NRG Media Acquires Waterloo, IA From Woodward Communications

NRG Media, LLC  has agreed to purchase the assets of radio stations KFMW-FM, KOKZ-FM, KWLO-AM, and KXEL-AM, Waterloo, IA from Woodward Communications Inc. (subject to FCC approval).  The purchase price is $3,550,000. 

Jody McCoy of Media Services Group’s Colorado Springs office was the exclusive broker representing the seller in this transaction.

George
Media Services Group

Will We See You At The Radio Show?

The Radio Show in Indy is just weeks away. Media Services Group will be at the Westin. Let me know if you would like to get together. #Radio

George

Let's meet at the NAB Show

The Media Services Group suite is in the Encore tower, # 3806.  Please stop by and say hello.

George

Radio has turned the corner

Radio revenues are reported up two months in a row in both New York and Los Angeles.  The broadcasters I am talking with are, for the most part, telling the same story.  The radio business is improving.

The overhang of workouts and bankruptcy deals has been absorbed into the market.  The depressed pricing inherent in these types of transactions has pretty much run its course.  Balance Sheets today are much healthier than those from five or six years ago.

Bottom line:  Radio has turned the corner.

While multiples are still mostly between 6x and 7x, look for fewer deals in the 5s and more pushing 8x.  The bias is now clearly to the upside.

If you would like to confidentially discuss station pricing and opportunities, the Media Services Group suite will once again be at the Encore beginning on Sunday.  Please get in touch if you would like to get together.

George
Media Services Group

Attending the Hispanic Radio Conference?

If you're headed to the Radio Ink Hispanic Radio Conference next week in San Diego and would like to get together, please let me know.

George
Media Services Group

JVC expands into Gainesville-Ocala, FL

JVC Media/JVC Broadcasting has expanded with JVC Media of Florida’s announcement to purchase a Gainesville/Ocala, FL cluster from Asterisk Communications. JVC has been operating the stations in an LMA since May. On January 17, JVC filed its formal application to acquire the stations for $3.5 Million.*

The stations include Hot AC WMFQ-FM, Country WTRS-FM/WYGC-FM simulcast and Rhythmic CHR WXJZ (“Party 100.9”). The $3.5 million deal includes $350K down, $500,000 in a promissory note and $2,650,000 cash at closing.

JVC will spin its CHR/Dance WBXY-FM (“Party 99.5) to RMA Media (Ricardo Arroyo) for $500K. On December 26, Party 99.5’s format was moved to JVC’s WXJZ-FM (100.9) last month. John Caracciolo and Victor Canales are the principals of JVC, and financing is provided by Northwood Ventures. The stations include two primarily serving the Ocala and three oriented to the northern Gainesville side.

Ocala
WTRS-FM Dunnellon, a Class C2 on 102.3 MHz with 50 kW @ 489’
WMFQ-FM Ocala, a Class C2 on 92.9 MHz with 50 kW @ 476’

Gainesville
WXJZ-FM Gainesville, a Class A on 100.9 MHz with 6 kW @ 299’
WBXY-FM La Crosse, a Class A on 99.5 MHz with 2.2 kW @ 472’
WYGC-FM High Springs, a Class A on 104.9 MHz with 3.2 kW @ 449’

I was pleased to represent the seller, Asterisk Communications in the transaction.  Congratulations to Fred Ingham, John Caracciolo, Paul Homer, Ricardo Arroyo, and Victor Canales on the deal.

*Pending FCC approval

George
Media Services Group

Tower database available

Closed Circuit to tower owners:

The Inside Towers database has been released and is now shipping.

You can now lookup, plot, map sort and filter all of the tower information from the FCC’s tower registration database in one easy-to-use program.  Custom user information, including attaching local files and folders can be appended to any record.  Towers may be looked up by distance from a Zip Code, lat/long coordinates or an existing tower.  Column displays are customizable.  And the database may be updated (online) as often as you require.

Google maps and Google Earth satellite and mapping are available with a single click.  And fields may be exported for further use in another program.

The database is available for a one-time fee of $1,500; quotes for multiple licenses are available on request. Contact Inside Towers today at:  Inside Towers Database 

You can order today at:  Order Inside Towers Database

George
Media Services Group

Wiley Rein's Media Practice Launches Law Blog

Wiley Rein has announced the launch of a new blog, WileyonMedia.  It highlights the latest news and insights from the firm's top-ranked media attorneys.  Broadcast and multichannel video regulation, media transactions, program content, digital rights, journalism, employment, privacy, and happenings at the Federal Communications Commission (FCC), the Federal Trade Commission (FTC), and on Capitol Hill are among the topics covered by the firm's media law professionals.

Wiley Rein Chairman Richard E. Wiley, the former FCC chairman who heads the firm's communications practice, will be a regular contributor.  This looks like a great addition to your reading list.

George
Media Services Group

Gary Hess's story on his leap from broadcasting to forming American Tower

Our sister publication, Inside Towers, wrote an interesting piece on Gary Hess and his jump with Steve Dodge and Jimmy Eisenstein from broadcasting to towers, launching American Tower.  It all started with one broadcast tower (and an attempt to keep a Palm Beach FM station on the air).  Check it out HERE.  Quite a story!

If you would like a free charter subscription to Inside Towers, click HERE.

George
Media Services Group

Lew Dickey, Sr. passes

Broadcasters lost one of our legends last week.  Lew Dickey, Sr. passed away.  He had a great run in radio and TV and will be missed.  My condolences to Lew Jr., John, and their family.

Here is the story from "Radio World:"

Fifty-year broadcaster Lew Dickey senior passed away Thanksgiving weekend.

He was 86.

The father of Cumulus Media CEO Lew Dickey Jr. and co-COO John Dickey began his career at Storer Broadcasting’s WWVA(AM), Wheeling, W.Va. He was promoted within Storer to leadership positions at KDKA(TV), Pittsburgh followed by WAGA(TV), Atlanta. In 1958, he founded Midwestern Broadcasting by acquiring WKWK, Wheeling, W.Va. Dickey turned around the station in 24 months. He started expanding  Midwestern by adding Toledo, Ohio stations WOHO(AM) in 1965 and WWWM(FM) in 1973.

Shortly afterwards, Dickey bought WLIO(TV), Lima, Ohio in partnership with the Toledo Blade newspaper. In 1992, he purchased WALR(FM) and WCNN(AM), Atlanta.

“My dad was an enormously talented broadcaster and, more importantly, a deeply devoted husband, father and mentor. He touched the lives of many people and will be dearly missed,” said Lew Dickey Jr. in a statement.

Lew Dickey Sr. is survived by his wife of 57 years, Patricia; six children: Pat, Lew, David, John, Michael and Caroline; and eight grandchildren. As of press time, services plans had not been publicly mentioned.

What was the multiple?

Broadcast cash flow multiples have always been the top discussion topic with radio and television station buyers, sellers, bankers and brokers.  Particularly in the convention bars.  But, “caveat emptor!”  There are a myriad of ways to cause an “apples & oranges” comparison.  Here are a few thoughts to help you match your apples to other apples:

• Take all discussions on multiples with a grain of salt, whether directly with the participants or in published reports. Unless you have seen the financial statements and the asset purchase agreement, you do not really know the multiple.
• The multiple to the seller and the multiple to the buyer are usually very different on the SAME transaction; just ask them. Case in point: on a transaction some years ago, my client, the seller, thought that he got a 20x multiple. The buyer thought that they bought at 12x. They were both correct. The price and the cash flow at the time of the signing of the APA suggest that the seller was correct. The actual and pro forma cash at the closing, following a long LMA, suggest that the buyer was correct.
• BCF multiples can be based on a) trailing twelve months, b) calendar year, c) projected, d) reconstructed with expense savings pro forma, or e) any combination.
• Published multiples are often estimates from uninvolved parties, or if from an involved party, reflective of the "spin" that he/she wants to create in the marketplace. Brokers are often asked for the multiple in a deal; most, like us, will not give them out. Some make up their own number which often bears little resemblance to reality.

• Often, a sale will bring a lower real multiple if several markets are involved (many times a seller could net much more, and a higher sale multiple, if they break up the markets and sell to strategic buyers).
• Sometimes the "true" multiple is buried in the weeds of the transaction, particularly if swaps are involved.
• How do you value the stock component of a deal if the consideration is a combination of cash and stock?
• How do you "adjust" the multiple to fair market value when there are tax considerations (such as 1031 like kind exchanges).
• "Distress" situations (bankruptcy and receivership) usually bring lower multiples than sales of healthy businesses.
• Stock sales bring lower multiples than asset sales (to compensate for the tax risk and lower basis).

• Multiples are often higher in cash flow deals where additional cost savings are obvious.
• Multiples are often higher when the seller is taking back paper.
• What is the multiple if there is no (or minimal) cash flow?

There are a lot of factors which enter into the "multiples" discussion. Take care to make sure that all involved parties are speaking the same language.  Ultimately the value of the station (or cluster) is worth what a willing buyer will pay and what a willing seller will accept.  A buyer should determine his/her price based on the value of the future returns, discounted at a reasonable estimate of the risk.  In the end, the marketplace determines the price.

George

Media Services Group


P.S.

Following this initial post, several additional examples of the "My Cash Flow Multiple" vs. "Your Cash Flow Multiple" argument surfaced:

• The treatment/allocation of corporate expenses in adjusting EBITDA back to BCF.
• Add-backs of "owner expenses" (i.e. whether or not they are truly operating expenses).
• Treatment of "inter-company" revenue such as traffic services and unwired nets (which often vaporizes at closing).
• Inclusion or exclusion of Accounts Receivable.

A few words about last week’s 2013 Radio Show in Orlando . . .

Things were a lot more upbeat this year; the “buzz” was good.  And the venue (Rosen Shingle Creek) was comfortable and convenient.  Here is a link to Radio Ink’s “10 Reasons The NAB Radio Show Rocked!”

Media Services Group gathered for a meeting the day before the show started.  It is always a good opportunity for us to compare notes on the state of the industry.  With our national footprint of eleven offices, we are able to get a handle on trends, particularly in the area of station values.

We believe that radio station prices are fundamentally trading in a range of 6.0x to 7.0x Broadcast Cash Flow, with “outlier” deals as low as the 5s and as high as the 8s.  Our confidence level on this position is quite high; and the meetings we had in our suite with buyers and sellers supported the thesis.

Lew Paper’s (Pillsbury) breakfast was jam packed this year.  This is a good barometer of the state of the trading business.  Marci Ryvicker (Wells Fargo) kicked off the session with her annual state-of-the-industry report.  It was generally upbeat, though she pointed out that radio’s gains at the expense of local newspapers had pretty much run its course.  Still, radio is trending up somewhat for the year.

The group head panel consisted of:

• Jeff Warshaw – Connoisseur
• Larry Wilson – Alpha; L & L
• Mary Quass – NRG
• Lew Dickey – Cumulus

Jeff made some salient points about radio being radio’s worst enemy.  He noted our tendency to shoot ourselves with massive spot loads and the failure to provide compelling local content.

Larry noted that you can once again buy stations at reasonable prices (putting his money where his mouth is once again with his recently announced $13 million deal for Columbia, SC).  He also cited our early stage position in monetizing digital, and the need to improve the quality of commercials.

Mary noted that investment capital is returning to radio, including some community banks.  Along with Jeff, she touched on the need to bring new people into the industry.

Lew talked about Cumulus’ recent acquisitions of Rdio and Westwood One (formerly Dial Global).  He cited XM/Sirius as a competitive threat, but stressed that they still receive less than 5% of listening.

Fred Jacobs posted a great list of “remarkable Radio Show quotes” which you can check out HERE.

Here is a list of the Marconi winners.

Next year’s show takes place September 10-12 in Indianapolis, Indiana.

Finally, thanks to all who came by our suite.  It provided a great opportunity to catch up.  Planning starts now for the NAB Show in Las Vegas, April 5 – 10, 2014.

George
Media Services Group

Stop by the Media Services Group suite at the Radio Show

The Media Services Group suite at the Radio Show is # 11423 (Rosen Shingle Creek).  Come by and see us!

George