Alpha Media Sells Two Virginia Radio Stations to Educational Media Foundation (Press Release)

Educational Media Foundation (EMF) has entered into an agreement to acquire WLFV-FM in Midlothian, VA and WARV-FM in Petersburg, VA, serving Richmond, VA from Alpha Media.

The purchase price is $2,000,000.*

George Reed of Media Services Group represented the Seller in this transaction.

'Let's Make A Deal in 2017,' Radio Ink Special Broker Report

They work the phones and their contacts every day, looking for deals, proposing transactions, hooking sellers up with buyers. Brokers who deal in radio have all the inside information on who has the capital, who wants to sell, and what the real multiples are.

According to SNL Kagan, through he first three quarters of 2016, the radio deal volume was about $418 million, with the Beasley purchase of Greater Media deal being the largest ($159 million) - and that's low. Read the full article here.

Crown Castle to Buy FiberNet for $1.5B Adding 11,500 Miles of Fiber to Portfolio

Crown Castle (NYSE:CCI) announced today that it has entered into a definitive agreement to acquire FPL FiberNet Holdings, LLC and certain other subsidiaries of NextEra Energy, Inc. (NYSE:NEE) (collectively, “FiberNet”) for approximately $1.5 billion in cash (subject to certain limited adjustments). FiberNet is a fiber services provider that owns or has rights to approximately 11,500 route miles of fiber installed and under construction in Florida and Texas, inclusive of approximately 6,000 route miles of fiber in top metro markets.  Pro forma for the proposed acquisition, Crown Castle will own or have rights to approximately 28,500 route miles of fiber.

“The addition of FiberNet’s complementary footprint in top metro markets in South Florida and Texas bolsters our fiber available for small cells in markets where we see significant demand from our wireless carrier customers,” said Jay Brown, Crown Castle’s Chief Executive Officer. “As demand for wireless connectivity continues to grow, small cells are playing an increasingly important role in adding the network capacity and density needed to provide ubiquitous high-speed, high-capacity wireless services.  With a long runway of expected growth ahead for small cells, we believe our investment in FiberNet further strengthens our leading position in small cells and will enhance our long-term dividend growth.”

Crown Castle expects the acquisition to close in the first half of 2017 and to be immediately accretive to Adjusted Funds from Operations (“AFFO”) per share upon closing.  In the first year of Crown Castle’s ownership, the transaction is expected to contribute approximately $105 to $110 million to gross margin and approximately $15 to $20 million of general and administrative expenses.  Additionally, the transaction includes approximately $5 million in annual cash flows associated with a customer lease that will be accounted for as a financing lease and therefore not contribute to the expected gross margin.  Supplemental materials related to the transaction have been posted on the Crown Castle website at http://investor.crowncastle.com.

Salina Radio Stations Acquired by Rocking M Media, LLC. (Press Release)

Salina, KS: (Wednesday, October 12, 2016) Alpha Media LLC and Rocking M Media, LLC announced today their formal filing with the Federal Communications Commission to transfer five of Alpha Media’s radio stations in Salina, Abilene and Manhattan Kansas to Rocking M Media.
The radio stations to be transferred are; KSAL-AM 1150; KSAL-FM 104.9; KABI-AM 1560; KYEZ-FM 93.7 and KBLS-FM 102.5.

Alpha Media CEO/President, Bob Proffitt commented on the announcement, “We’re happy for our employees in Salina to be joining such a great company. Rocking M Media is a strong force in Kansas radio and media.”

Rocking M Media President, Christopher Miller added, “RMM is so very excited to add the Alpha Media staff and stations to our family. They will be a great addition and will be instrumental in helping RMM promote the businesses and communities in and around our Salina and Abilene markets.”

Alpha Media was represented by George Reed of Media Services Group and Rocking M Media was represented by Gammon Miller media investment bankers.

About Alpha Media
Alpha Media, headquartered in Portland, Oregon was formed by veteran radio executive, Larry Wilson in August 2009 and initially acquired six Portland radio stations. After several acquisitions and this transaction, Alpha Media will own or operate 246 radio stations within 50 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 intimate performance venues, Skype Live Studio in Portland Oregon and Alamo Lounge in San Antonio, Texas. 

About Rocking M Media
In 2007 the Miller family established what has become known as Rocking M Media, LLC (RMM) as a business development company. The RMM group of 24 radio stations covers all of Central and Western Kansas and parts of Nebraska, Colorado, Oklahoma, Texas and Wyoming.
The principals of RMM are Monte and Doris Miller and their sons Christopher Miller and Quinn Miller and Christopher’s son Cale Miller. The Miller family has been developing businesses in Kansas for more than 100 years. They have owned newspapers, television stations and now radio stations. Monte Miller’s grandfather was A.Q. Miller, from Salina Kansas and he started the family media business with owning newspapers in Kansas and Colorado in the 1890’s. The Journalism School at Kansas State University is named The A.Q. Miller Family School of Journalism and Mass Communications.

As a business development company RMM focuses on the needs of entrepreneurs and business owners in its radio markets; by offering incubator office space with business training, radio advertising, digital media, social media and raising capital with its crowd funding site RuralGrowth.com.

RMM is as entrepreneurial as its clients and has launched other businesses that complement the RMM platform like; TodayInKansas.com a news portal that has its own radio network that broadcasts three Kansas news reports daily on 27 radio stations in Kansas, the Kansas Farm and Ranch Radio network the largest Ag radio network in the state, Wheat State Signs a sign company in Pratt, KS, KANBids.com an online auction site with auctions every two weeks where RMM sells local services and merchandise from its radio station advertisers. 

RBR Article On My M&A Predictions

By Leslie Stimson | RBR 

Asset sales for radio were slow in the first half of the year. Up until Beasley Broadcast Group's announced $240 million acquisition of Greater Media in July, the biggest transaction in radio this year was KSBJ Educational Foundation's $10 million deal to buy KUHA-FM from Houston Public media. 

RBR+TVBR asked Media Services Group Managing Partner George Reed for his thoughts on how the rest of the year will play out for radio M&A. Read the full article here. 

WVJT, LLC To Purchase WVMP-FM From Community Media Group, LLC (Press Release)

WVJT, LLC has entered into an agreement* to purchase WVMP (FM) in Roanoke, VA, from Community Media Group, LLC. The buyer is headed by Todd Robinson, who owns radio stations in Lynchburg, Bedford, Covington, Clifton Forge and Lewisburg West Virginia. The seller is headed by Dr. William E. Amos, who holds no other broadcast interests, but will become a shareholder of Community Media Group upon the closing of the transaction. WVMP will continue to be located at the Patrick Henry Hotel. 

WVJT, LLC began operating WVMP on August 1, 2016, under a local marketing agreement. According to Todd Robinson, "Our group is excited to become a part of such a wonderful community (Roanoke area) and look forward to continuing and expanding the fine broadcast services started by Dr. Amos and his very capable staff." 

According to Dr. Amos, "My workload as CTO of Meridium and other software ventures has increased. This month we will release a new version of our software and I need to spend more time working with Meridium customers and project teams making the transition to the new product line. I'm excited to be a shareholder of Todd's company and will assist as required. Being a shareholder of the group was important to me continue to promote the local market." He went on to say, "I'm quite proud of the gains the station has made over the past eight months in terms of revenue and improved signal. It's good to leave the station on an up note. The entire staff has done a remarkable job and I can't wait to see the impact of WVMP being affiliated with a group that provides complete market coverage." 

The purchase price is $600,000. 

George Reed of Media Services Group represented the Seller in this transaction. 

*Pending FCC Approval 

InSite Wireless Group Announces Macquarie's $280M Investment (from Inside Towers)

InSite Wireless Group today announced that Macquarie Infrastructure Partners, as part of an initial investment of approximately $280 million—has acquired a 42.5% equity interest in the company from Catalyst Investors II, L.P. and other minority investors.

David Weisman, InSite’s President and CEO describes the new partnership as “groundbreaking...and represents a significant growth opportunity for us. We’re delighted to partner with an experienced investor that has such a keen understanding of the wireless telecommunications infrastructure space,” he said. 

Macquarie has also committed to additional future investments to promote InSite’s continued growth. InSite owns, operates, and manages wireless telecommunications tower site facilities and distributed antenna systems (DAS) across the United States, Puerto Rico, U.S. Virgin Islands, Canada, and Australia.

InSite will continue to be led by its existing management team of co-founders David  Weisman and Lance C. Cawley, CFO. Cox Enterprises—and several of its subsidiaries—and Catalyst Investors IV, L.P. will continue to be investors in InSite.

“We are very pleased to become a major investor in InSite,” said Karl Kuchel, Chief Executive Officer of Macquarie Infrastructure Partners Inc. “The company has an experienced management team that has delivered strong growth over many years. We look forward to partnering with this team, Cox, and Catalyst to support InSite’s future growth.”

“We believe that wireless infrastructure represents an attractive area for long-term investment,” said Pat Esser, President of Cox Communications. “We are excited to welcome MIP III as an investor and believe that InSite has emerged from this transaction as a truly unique provider in the industry, well-positioned for long-term strategic growth.”

“It has been a privilege to be a part of InSite’s tremendous growth and success over the last six years. David and his team delivered an exceptional return on our initial investment. We are thrilled to continue as an investor and as a partner with Macquarie Infrastructure Partners and Cox,” said Todd Clapp, Partner with Catalyst Investors.

The purchase agreement was signed by the parties on July 1, 2016. The transaction was subject to customary regulatory approvals and closing conditions, and was closed effective July 29, 2016. Evercore served as financial advisor to InSite and Lowenstein Sandler LLP and Sullivan and Worcester LLP provided legal counsel. Guggenheim Securities served as financial advisor to MIP III and White & Case LLP provided legal counsel.

George
Media Services Group

Unlock the Value in Your Broadcast Towers

Many of our broadcaster clients have chosen to monetize their tower assets at impressive prices.  This year alone, I have sold and closed over 200 broadcast towers to tower consolidators.  While radio stations continue to trade at 6.0x to 7.0x cash flow multiples, towers are trading and 10.0x to 12.0x, and well into the “teens” if they include 3^rd-party cellular tenants.


If you would like to confidentially discuss the value and marketability of your broadcast towers, please give me a call.


George
Media Services Group
904.285.3239

Beasley Broadcast Group + Greater Media

Thoughts on the $240 million deal. Read them here. 

NJ Broadcasting, LLC Closes on WWRL-AM In New York City (Press Release)

NJ Broadcasting, LLC, owned by Dr. Nimisha Shukla, closed on the purchase of WWRL-AM, New York City, from Access.1 Communications Corp. Access.1 is headed by Chesley Maddox-Dorsey. The station has been operated by NJ Broadcasting under an LMA since February 1. The purchase price was $7,000,000. 

WWRL-AM, 1600 kHz, programs for the large South Asian Community located throughout the Tri-State Area. Dr. Shukla, a Pediatric Physician, also owns 7 Days Pediatrics, located in Edison, New Jersey.

Tom McKinley and George Reed of Media Services Group represented the seller in this transaction.

Tweet of the Week

Have a great 4th!

George

Guest Blogger Stephan Sloan: Bigger Than Big

$86,422,558,704

That looks like $2.71/MHz/Pop.

I didn't have the optimism to model that there would be reserve price discipline of the middle and smaller TV station owners to support this. The message I see in this information is that the TV broadcasters have participated fully in the FCC's plan and the spectrum is valuable to them. I also see an effect from the consolidation in the Television business as the larger broadcasters had the time and talent to determine optimal yield analysis and bidding strategies. While I remain surprised by the total I believe there is substantial data to support validation from the Forward Auction.

Before recoiling at that clearing cost please consider the quote below from Peter Compton in commenting on the results of the AWS3 Auction back in May of 2015.

"The nationwide average price for the paired blocks was $2.72/MHzPop, about three times higher than investment banking estimates before the auction began."

Stephan Sloan 
Director, Media Service Group
401.454.3130
ss@mediaservicesgroup.com

Guest Blogger Stephan Sloan: The Big Big Number

I tipped my hand with my LinkedIn post on June 1st "The $40 Billion Blink" as to what sort of capital I thought would be required to clear 126 MHz in the Reverse Auction.

George Box famously observed that all models are wrong but some are useful. In this spirit I accept that my models are wrong but none the less support and illustrate reality. Though many of the industry professionals I respect have opined at much lower Reverse Auction clearing costs, I expect $58 Billion or greater. The histogram below presents the data from 99 iterations modeling the Reverse Auction.

What this data means is that I can construct models that indicate a high probability that the clearing cost is more than $58 Billion and costs exceeding $60 Billion are a significant possibility. This represents a range of approximately $1.72 to $1.93 /MHz/Pop. If you accept the idea that the first round of the auction evidenced stations freezing based upon the requirement to meet the maximum possible clearing target, then we were bound from the moment the clearing target was announced, to end up here.

$58 Billion also has an additional significance to those of you following my LinkedIn postings. I’ve enjoyed very much the opportunity to post these thoughts and your responses. For my contacts who would like to take me up on it, I will wager a steak dinner– at the restaurant of your choosing- that the clearing cost will exceed $58 Billion. $57,999,999,999.99 or lower and it’s on me, just memorialize your interest in an email, tweet, LinkedIn Message or other dated communication before the FCC releases the data. I think a good reference should be the Incentive Auction dashboard.

I’ve been focused on this level of clearing cost since 126 MHZ was announced on April 29th. I look forward to discussing how this value is validated in the Forward Auction.

Stephan Sloan
Director, Media Services Group
401.454.3130
ss@mediaservicesgroup.com

Guest Blogger Stephan Sloan: Moving Day

This week's progress in the Reverse Auction includes the rounds in which stations will become frozen in much greater numbers than in the previous weeks' activity. I anticipate that somewhere around 300 television stations will be frozen in the auction in rounds 31 through 45. 

While the last week's rounds illustrated the price decrement in relation to opening bid, this week makes clear the diminished bids in terms of dollars. Round 31's activity is expected to yield an average of $68 million freeze price with a high of $108 million and a low of $16 million (a Class A station). At the week's expected ending round 45, the freeze prices are down to an average of $8 million with a high of $13 million and a low of $5 million. The following chart illustrates the declining freeze prices by stations and round. 

Considering the post-auction scarcity of television stations, especially UHF channels, it is hard to imagine many markets where this level of pricing is not a significant discount to what will be available to station owners post auction. 

Since the Round 21-22 delay, the bidding appears to have progressed smoothly. From what we have observed so far I do not anticipate additional delays and am impressed with the FCC staff's ability to conduct, process, report and repeat the bidding rounds. 

Finishing this week on schedule leaves short work for next week to conclude the Reverse Auction. Soon we will find out what will be required to validate this auction in the Forward Auction. 

Stephan Sloan
Director, Media Services Group
401.454.3130
ss@mediaservicesgroup.com

Guest Blogger Stephan Sloan: What was that Noise?

I found this announcement yesterday afternoon: Round 22 was delayed. Interesting. 

The FCC stated:

"We are taking this step because bid processing for round 21 is still underway. We will post the results of round 21 when bid processing is complete." 

The computing tools I have used to simulate the Reverse Auction progress more slowly as it reaches the later rounds. It is oversimplification but the more activity (freezing/repacking) that takes place per round the more time required to process the calculations. More CPUs will not make the calculation go more quickly only faster processors will help and I'm assuming we are all using the fast stuff. 

Maybe Round 21 saw a spike in activity. Perhaps we are finding out that the conduct of the Reverse Auction will take somewhat longer than advertised -- not due to the participation of bidders but what is required to conduct this complex task. 

Stephan Sloan
Director, Media Services Group
401.454.3130
ss@mediaservicesgroup.com

Guest Blogger Stephan Sloan: Out of the Doldrums

I believe the Reverse Auction's relative doldrums of the past week will ease this week. As is the way with doldrums though, it's almost assured that the change will be incremental. Don't expect any thunder claps; I do not believe that's the way of this algorithm with my assumptions. Just as the preceding rounds were characterized by not much going on, the present rounds will have limited stimulus and that will place modest demands on the algorithm to freeze additional stations. The chart below presents potential data for the number of stations frozen in the auction for the rounds to be conducted this week. In this model approximately 80 stations are frozen for a value of slightly over $6 Billion. 

At the close of business on Monday, June 13th, with the completion of the 19th round of the auction, the current bids will have dropped just below 40% of the opening bids. For many network affiliates and stations with strong business plans the ride ends now as they are more valuable to their owners than the auction price. By the end of the week the bid prices will have decremented to approximately 25% of the opening bid. 

These rounds may be where the smart speculators get rewarded. If a speculator or station owner was not fortunate enough to be in the participation constrained first round of freezing activity, the next best prospect for them would be to hold a station keystoned among other stations with significantly higher reserves than their own. In this example the round a station is frozen results not from the reserve price of the station itself but rather the algorithm exhausting other options for repacking given the higher valued neighboring stations dropping out. So I suppose some owners are tuned in -- turned on -- and hoping everybody else will hurry up and drop out. 

Stephan Sloan
Director, Media Services Group
401.454.3130
ss@mediaservicesgroup.com 

Guest Blogger Stephan Sloan: 57 Channels and Nothing On

After the shock and awe that I believe was the initial round of the auction my expectations of the subsequent rounds are very different. 

The algorithmic alchemy resulting from the pressure between solving for the highest clearing target possible given the participation will likely have spent its influence by the end of the first round. The following rounds will decrement steadily seeking a new level of scarcity supported not by participation but rather reserve prices that cause the process to repack those stations with the highest reserves and then seek to order and select among the remaining open bids. 

I believe it unlikely that any additional stations were frozen last week after the initial round. While not completely without event I predict that fewer than 50 stations will be frozen during the rounds accomplished and scheduled for this week. 

My analysis is based upon an assumption that the algorithm will find the little pressure or few reserve prices at very high percentages of the opening bid price. In addition, I believe there is significant population of stations for which the sum of enterprise value and wind-down costs are a very small percentage of opening bid price. Observing a sample of some 1,200+ stations which I model to participate in the Reverse Auction the average reserve price is only about 15% of the opening bid. While an average of this population may be misleading given its variety of participants it does help illustrate a population of reserve prices that significantly skew towards the later rounds of the Reverse Auction. The histogram that follows present distribution of reverse prices from this sample set of stations.

So if this week feels a little boring for as extraordinary event as the Reverse Auction is, it' snot you - it's the math. Math is often boring. 

Stephan Sloan 
Director, Media Services Group
401.454.3130
ss@mediaservicesgroup.com

Guest Blogger Stephan Sloan: The $40 Billion Blink

Tuesday quietly marked a most remarkable day in television station trading history. From models developed with my own assumptions, I believe the initial moment of the FCC Reverse Auction saw approximately 115 stations frozen at a valuation in excess of $40 Billion. 

For reference, if one sums all of the television stations sold from 2003 through 2014, inclusive of merger activity, it approximates the value of that one first moment of the auction. I appreciate that this estimate of the first round of the auction exceeds the total value of the Reverse Auction published by many respected entities; however, I have confidence in this estimate as I believe it to be the natural result of the function of the auction algorithm and the legislation causing the entire Reverse and Forward Auction spectacle.

With the requirement of the FCC to attempt the clearance of the maximum bandwidth for which there is participation by broadcasters, we were nearly certain to set the auction algorithm to solve a scenario where there was scarcity of participation among the most valuable stations in the nation. In this initial moment of the auction that scarcity required the freezing of stations at their opening bid with a swath of the northeast consuming $10+ Billion and the mid-Atlantic as well as Southern California taking $8 Billion each.

In terms of the Reverse Auction model, as I see it, we have accomplished the “head” of this freezing activity and will next set about the much more time consuming business of defining the long tail.

Stephan Sloan 
Director, Media Services Group
401.454.3130
ss@mediaservicesgroup.com

Big News in the TV World

FCC sets 126 MHz Spectrum Auction Clearing Target. Signals strong station interest in big auction payday.

Read the story HERE.

George
Media Services Group

Media Services Group Tops the Rankings Again (Press Release)

Media Services Group maintains the top spot in the broadcast brokerage rankings for 2015.*

• #1, Top radio broker
• #1, Top broadcast broker by number of radio stations sold
• #1, Top broadcast broker by number of total deals
• #1 and #6, Top brokered deals (excluding deals exclusively brokered by investment banks)

About Media Services Group: 

Media Services Group was founded in 1990 and has grown into one of the most successful media brokerage firms in the past decade. The firm offers brokerage, asset management, valuation and investment banking services to the broadcast and new media industries from offices throughout the U.S. For more information, please visit www.mediaservicesgroup.com

*Source: SNL Kagan Broadcast Investor: Deals & Finance (Edition: February 29, 2016)

Vertical Bridge Closes on Alpha Media Radio Broadcast Towers (Press Release)

Vertical Bridge, the largest private owner and manager of wireless communication infrastructure in the U.S., today announced that it has completed the acquisition of nearly 200 radio broadcast towers in a two part transaction with Alpha Media. The portfolio of assets acquired includes 64 sites from Alpha Media’s existing portfolio and 49 sites which Alpha Media recently acquired as part of its purchase of radio stations from Digity, LLC. Financial terms of the transaction were not disclosed.

With this acquisition, Vertical Bridge now has a total portfolio of over 42,000 towers, rooftop locations, billboards, utility infrastructure and other site locations that it owns, operates or manages. The company’s geographic presence in key markets across the U.S. has also expanded significantly.

“We are thrilled to partner with Larry Wilson and Alpha Media, which owns and operates an admirable portfolio of assets in prime locations across top markets,” said Alex Gellman, Chief Executive Officer of Vertical Bridge. “It would be challenging to site these towers today, and we feel fortunate to expand our portfolio into these areas and further strengthen Vertical Bridge’s offering to our partners. Since these towers have not yet been marketed to wireless carriers, they offer attractive new collocation opportunities. Our broadcast partners will also benefit from the height of these towers as they will provide good relocation options relative to the 600MHz auction repacking process.”

Alpha Media Chairman, Larry Wilson commented on the announcement, “We could not have done this without the hard work and determination from the great team at Vertical Bridge. We’re proud to call them a partner of the Alpha Media family.”

George Reed of Media Services Group is the broker for Alpha Media.