Thursday, October 29, 2009

FCC Attorney (and great guy) Wade Hargrove honored at UNC-Chapel Hill

Last night, I attended a gathering of some 150+ of Wade Hargrove’s friends, family, clients and colleagues who came together for a surprise dinner at the Carolina Inn in Chapel Hill. Wade walked into the room to a standing ovation and glaring TV camera lights, only to then learn that he was the namesake for “The Wade H. Hargrove Communications Law and Policy Colloquium.” The Hargrove Colloquium will attract prominent figures from the media industry, law and government to deliver high-profile public lectures and interact with students and faculty.

Wade, a graduate of Chapel Hill and now a university Trustee, is the driving force behind the UNC Center for Media Law and Policy. It is a national forum where media industry leaders and legal scholars and practitioners meet to discuss emerging issues at the intersection of media and law.

The evening was sponsored by the North Carolina Association of Broadcasters, the North Carolina Cable Telecommunications Association, the Hearst Corporation, the University of North Carolina School of Journalism and Mass Communications, and the UNC School of Law. Wade, a partner at Raleigh based Brooks Pierce (, has been NCAB’s executive director and counsel for more than 39 years, NCCTA’s general counsel for 30 years, and Hearst’s regulatory counsel for 20 years.

Dean Jean Folkerts of the School of Journalism and Mass Communications emceed the event which featured some great Wade Hargrove stories, courtesy of Carl Venters, Jack Stanley, Mark Prak, and David Barrett. A shocked and emotional Wade Hargrove graciously accepted the honor (Wade’s a great speaker even when it is impromptu).

The $200,000+ seed money for the Colloquium came from the ABC Television Affiliates Association, Capitol Broadcasting, the FOX Television Affiliates Association and a host of Wade’s fans. A “Who’s Who” list of TV operators was on hand for the occasion.

I want to add a personal note. I’ve known Wade for a long time and have witnessed first-hand his dedication to broadcasters, large and small. While he enjoys a fabulous reputation nationally, with an impressive client list, he works tirelessly for broadcasters in his beloved North Carolina. He deserves the many accolades he received last night. And fitting Wade’s other passion of music, the evening culminated with the performance of a red hot bluegrass band.

Congratulations Wade!


Tuesday, October 27, 2009

Hello. My name is George Reed, and I Tweet.

So here you are reading a blog. If you’re like me, not long ago you scoffed at “bloggers” and “blogging” as something done by the fringe elements with too much time on their hands. Who do they think they are?

But times have changed. Blogs have become a useful tool for news, opinion, and idea dissemination. Twitter ( is simply a mini-blog, limited to 140 characters. And it has taken off like a rocket, more so with the “grownups” than the kids. It is widely used by professionals. The benefits of Twitter to me and my brokerage practice increase daily, as more and more of my clients, customers, and other industry professionals add their voices to the Twitter universe.

I signed up for Twitter (@GeorgeReedRadio) within the past year just to learn what it was all about (I launched this blog for the same reason). The benefits soon became apparent and I now follow just under 300 people (with just under 250 following me). The people I follow generally fall into these categories:

* Clients, customers, and prospects
* Media and marketing opinion leaders
* Broadcasting related groups (NAB, state broadcasting associations, trade publications, consultants, FCC law firms and lawyers)
* General business
* Businesses and contacts in Charlottesville (where I own stations)
* Friends and family
* My radio stations (and those of my competitors)
* Radio personalities
* Local news and weatherNews on my other hobbies and interests

By following these Twitterers, I stay up to date on all kinds of useful, relevant information, often using links in the Tweets for follow-up. If I spot something which I think might be useful to my own Followers, I “re-Tweet” it. One of the keys to using Twitter effectively is to only Tweet what you think is relevant to your own Followers. I often Tweet links to interesting articles or websites, links to my blog if I have posted something useful, and re-Tweets of timely industry news items. Mashable has a great Guide Book for anything you might want to know about Twitter (

If you own and operate radio stations, your air personalities should be on Twitter. It allows them to expand their brand and your station’s brand. Follow a few DJ’s and you’ll see what I mean.

Try it out. It only takes a minute to set up an account. After you have set it up, pick out a few interesting people to follow (you can use Twitter’s Search function). Feel free to go to my account (, click on “Following,” and click on names which look interesting to you; you will be given the choice to “Follow” at the top of each profile. Here are a few ideas to get you going:


If the benefits become apparent (and I suspect that they will), you might want to consider Twitter software for your smart-phone (I use Twitterrific on my iPhone) and a more enhanced platform for your office computer (I use TweetDeck, available for free download

See you on Twitter!

Media Services Group

Thursday, October 22, 2009

"What's it worth?"

The two most common questions in a media broker’s life are:

1) What is my station/cluster/company worth?

2) What is HIS station/cluster/company worth?

Good brokers can usually respond quite accurately. But those questions have been a lot more difficult to answer over the last year. Liquidity vaporized, multiples dropped, and the bid/ask spread widened. If a buyer will buy and a seller will sell at 7x Broadcast Cash Flow (“BCF”), but there is no capital available to complete the transactions (or the assets are secured by an 8x bank loan), is the business really worth 7x?

While year-to-date radio transaction volume is a fraction of last year’s (which, in turn, was a fraction of the year before’s), let’s look at what actually DID sell so far this year. I queried our BIA database for all 2009 sales greater than or equal to $5 million which included at least one FM facility. From the resulting list of transactions, I eliminated two (one which was not an “arms-length” deal and one which was a “move-in” play) and added one (which was actually announced in late 2008, but closed in 2009). These ten deals should give us a good idea of station pricing in 2009:

1) Denver 12/08 CBS to Wilks
2) Hartford 02/09 Aloha Station Trust to Red Wolf
3) Portland # 1 05/09 Rose City to Alpha (Larry Wilson)
4) Las Vegas 05/09 Beasley to Royce
5) Pittsburgh 05/09 Sheridan to St. Joseph Missions
6) San Francisco 07/09 Flying Bear to Royce
7) Indianapolis 07/09 Oasis to EMF
8) Portland # 2 08/09 CBS to Alpha
9) New York 07/09 New York Times to Univision
10) Boston 09/09 Nassau to WGBH Educational

Let’s examine each of these in more detail. At the end, we will attempt to draw some conclusions. In each case, I used data from BIA except for Agency Commission (assumed 12% of gross revenue) to estimate Net Sales, and BCF Margin (where I used a hypothetical percentage which would be consistent with the reported revenue). For “stick” deals, I looked at the Cost per Pop as the primary metric. The Pop Count represents the number of persons under the 60 dBu contour for FM stations, and the 2.0 mVm contour for AM’s.

1) Denver

Sale Announced: 12/08
Calls: KIMN-FM, KWLI-FM (now KWOF-FM), and KXKL-FM
Buyer: Wilks Broadcast Group
Seller: CBS Radio
Market Rank: 21
Price: $19,500,000
Gross Revenue: $14,400,000
Net Revenue: $12,672,000
BCF Margin: 40%
BCF: $5,068,800
Multiple: 3.9x

I believe that the actual net revenue was closer to $10,000,000; at a 30% margin, you get BCF of $3,000,000. Under these revised assumptions, this would be a 6.5x deal. Even at a much lower cash flow, Jeff Wilks and his venture partners at Wicks made a great purchase. These are three good technical facilities with significant revenue.

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2) Hartford

Sale Announced: 02/09
Calls: WURH-FM (now WMRQ-FM)
Buyer: Red Wolf (John Fuller)
Seller: Aloha Station Trust
Market Rank: 50
Price: $7,900,000
Pop Count: 2,180,405
Cost per Pop: $3.62

The Seller is Clear Channel’s Aloha Trust. The station is in the New Haven market but also reaches into Hartford. I evaluated this deal as a “stick.”

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3) Portland # 1

Sale Announced: 12/08
Calls: KXL-AM and KXTG-FM
Buyer: Alpha Broadcasting LLC
Seller: Rose City Radio Corp.
Market Rank: 23
Price: $11,000,000
Gross Revenue: $7,750,000
Net Revenue: $6,820,000
BCF Margin: 30%
BCF: $2,046,000
Multiple: 5.4x

This deal gave Larry Wilson his platform in Portland (upon which he has subsequently grown; see below). This cluster originally was purchased for $55,000,000; by my reckoning, that is a $44,000,000 haircut.

The Seller is owned by radio veteran and Microsoft co-founder Paul Allen. Larry Wilson, founder of Citadel, is returning to the business after an eight year hiatus.

The combo is home to the NFL Seattle Seahawks, University of Oregon Ducks football, and the NBA Portland Trail Blazers. Both pro teams are owned by Paul Allen.

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4) Las Vegas

Sale Announced: 05/09
Calls: KYCE-FM (now KFRH-FM) and KBET-AM
Buyer: Royce International
Seller: Beasley Broadcast Group
Market Rank: 33
Price: $15,250,000
Pop Count: 1,376,084 (FM)
Cost per Pop: $10.90 (This assumes that the AM was worth $250,000

Ed Stolz bought the AM plus the KYCE facility (but not the country format). Instead, he got the CHR format from KFRH (with country flipping to KFRH). I evaluated both stations as “sticks.” This high Cost per Pop is reminiscent of numbers from a few years back, and is an outlier in my analysis. Absent any additional facts on this transaction (such as perhaps some valuable real estate), it looks like George Beasley made a good sale.

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5) Pittsburgh

Sale Announced: 05/09
Calls: WAMO-FM (now WAOB-FM), WAMO-AM (now WAOB) and WPGR-AM (dark)
Buyer: St. Joseph Missions
Seller: Sheridan Broadcasting
Market Rank: 24
Price: $8,900,000
Pop Count: 1,761,970 (FM)
Cost per Pop: $4.48 (This assumes that the AMs were worth $1,000,000)

These stations were taken non-commercial with new formats. I evaluated them as sticks, assigning a $1,000,000 value to the two AM’s. Seller Sheridan Broadcasting also operates the American Urban Radio Network.

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6) San Francisco

Sale Announced: 07/09
Calls: KNGY-FM (now KREV-FM)
Buyer: Royce International
Seller: Flying Bear Media
Market Rank: 4
Price: $6,500,000
Pop Count: 2,287,314
Cost per Pop: $2.84

This station was originally purchased for $33,700,000; another big haircut on our list. And the sale price represents the lowest Cost per Pop on our list, a great buy for Ed Stolz.

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7) Indianapolis

Sale Announced: 07/09
Calls: WKLU-FM
Buyer: Educational Media Foundation
Seller: Oasis Radio Group
Market Rank: 40
Price: $4,750,000
Pop Count: 1,049,007
Cost per Pop: $4.53

Based on the Cost per Pop, Russ Oasis did well on this sale. He sold his real estate separately for $1,550,000.

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8) Portland # 2

Sale Announced: 08/09
Buyer: Alpha Broadcasting LLC
Seller: CBS Radio
Market Rank: 23
Price: $40,000,000
Gross Revenue: $23,800,000
Net Revenue: $20,944,000
BCF Margin: 40%
BCF: $8,377,600
Multiple: 4.8x

This is the icing on the cake for Larry Wilson’s effort in Portland. My guess is that the actual cash flow is lower than in the above analysis, probably closer to $7,000,000. That would yield a 5.7x multiple. This gives Larry a 26.6% revenue share of the market.

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9) New York

Sale Announced: 07/09
Calls: WQXR-FM
Buyer: Univision
Seller: New York Times Co.
Market Rank: 1
Price: $45,000,000
Pop Count: 15,354,286
Cost per Pop: $2.93

WQXR was New York’s oldest classical music station. Univision is really paying $33,500,000 plus their WCAA-FM (Newark) facility. The Seller is keeping Univision’s cash, but flipping the WCAA facility and classical format to WNYC Radio for $11,500,000. WNYC Radio is operating 105.9 mHz as a non-commercial station. Univision retains their original WCAA call letters.

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10) Boston

Sale Announced: 09/09
Calls: WCRB-FM
Buyer: WGBH Educational Foundation
Seller: Nassau Broadcasting I
Market Rank: 10
Price: $14,000,000
Pop Count: 3,913,794
Cost per Pop: $3.58

I sold the original WCRB (now WKLB), albeit a much better technical facility, in 2006 for $100,000,000. My how things have changed! This sale was forced by Nassau’s lenders. The buyer, WGBH Educational Foundation, also owns public station WGBH-FM and digital PBS affiliates WGBH and WGBX in Boston.

To summarize, these comps tell a pretty consistent pricing story. Trading volume remains anemic and pricing soft. While I believe that cash flow multiples have bounced off of the bottom, I am seeing bids around 6x and asking prices around 8x. Sticks are trading around $2.50 to $3.50 per pop.

There is virtually no senior debt available for transactions, and until that changes, I do not look for significant pricing improvement. There is also the possibility of a glut of station inventory in the event that one (or more) of the major public companies implodes and restructures, forcing asset sales.

On the plus side, there has been improvement in the values of public broadcasting stocks and bonds, and there is some private equity on the sidelines.

“So what is my station worth?”


Wednesday, October 21, 2009

Jerry Del Colliano: The Disney Media Solution

You may not always agree with Jerry, but he will make you think. Here is an interesting piece on Disney/Steve Jobs and how their ideas could be applied to running radio and TV broadcasting companies:

Tuesday, October 20, 2009

Friday, October 16, 2009

Gary Vaynerchuk Saves the Radio Industry!


The turnaround of the radio industry begins when its leaders define and adopt a game winning strategy. The tactics (HD, interactive revenue, NTR, etc.) come later.

I believe that a key to at least one game winning strategy lies in Crush It!, Gary Vaynerchuk’s new book on social media. ( And I encourage every radio pro in the country to find a copy of the book, read it, and brainstorm ways to apply Gary’s social media brand-building techniques to the local media businesses of radio and TV.

Gary took his immigrant father’s liquor store from $4 million in revenue to $50 million in eight years. In 2006, he built his personal brand into a multi-million juggernaut using social media (cost: $15,000, plus countless hours of effort).

Imagine if every personality on your radio and TV station(s) devoted significant time and effort to building their personal brands in your market(s). The process described in the book is really quite simple. It is the energy and commitment devoted to the process which makes it successful. While many station personalities (at least those remaining employed in local radio and TV) blog and have Facebook pages, few, if any, utilize all of the brand building techniques described in the book.

We’re already generating meaningful local content. Why aren’t we making all of it available on podcasts? Why aren’t we feeding live video from our morning shows? Why doesn’t every station employee have a Flip cam to capture and broadcast on the Internet the pulse of our communities?

Sure, many DJ’s and TV personalities are blogging. But is the station really committed to building those blogs? Have we devoted any resources to their effort? Or are we simply content to have them knock out a few paragraphs during their next music sweep?

Gary’s book describes how he built himself into a multi-million dollar brand. And while it took (takes!) incredible effort, it wasn’t (and isn’t) rocket science.

Chapter One: “Passion is Everything.” Are your station personalities burning with the passion to become the #1 brand in their local market, or are they trying simply to be #1 in Arbitron or Nielsen?

This isn’t a paid endorsement. I bought the book. I know that there are a lot of really smart, creative, and talented pros in the broadcasting business. But we’re stuck in the rut of doing the things the same way that always worked in the past. That will not get the job done today or in the future. Pick up a copy of this book today and think through how you can employ its techniques in your station(s) beginning tomorrow. Crush It! is a “quick” read…it is a “must” read.


Media Services Group

Wednesday, October 14, 2009

Broadcast Tower Market Looking Up

At the right selling multiple of Tower Cash Flow ("TCF"), selling your broadcast tower(s) can be a great way to raise cash. (Note: TCF is your revenue minus operating expenses such as ground lease, utilities, property taxes and monitoring).

For much of the last year, broadcast tower assets languished at low multiples of TCF with few, if any buyers. Tower companies in general were capital constrained like every other business, and if they did buy something, it was usually wireless towers. Many tower companies expressed concerns about the creditworthiness of broadcaster tenants. I saw some offers at 3x to 5x TCF, but no takers.

Fast forward to today. Many broadcasters and sitting on great FM tower assets and the market is beginning to heat up. While capital is still tight, "vertical real estate" is a scarce commodity. Multiples have been bid up into the 8x to 10x range. With tower consolidators getting back into an acquisition mode, station multiples in a lower range than towers, and with "cash being king," now might be a good time to consider selling your towers. I would be happy to confidentially discuss your options with you.

If you would like more information on maximizing the value of your broadcast towers, I strongly recommend that you pick up a copy of Erwin Krasnow's and Henry Solomon's book, "Broadcast Towers - A Step-by-Step Guide to Making Money on Vertical Real Estate." You can order it from the NAB Store (

Media Services Group

Tuesday, October 13, 2009

Saturday, October 10, 2009

Station trading coming back to life?

Just a week ago, I formed a new group on LinkedIn (Radio/TV Station Buyers). I posted a few discussion topics, added some news feeds, and emailed a handful of broadcasters on LinkedIn to join. The "mission" of the group is simple:

"Dedicated to assisting broadcasters and first-time-buyers to successfully value, structure, finance, and purchase radio and television stations.

Members are encouraged to share news, information, and ideas on acquiring radio and television station businesses."

Now, just seven days later, the group has 73 new members. Many are existing station owners; some are broadcasters looking to acquire their first station. Frankly, I'm astounded. Reading the daily headlines, one gets the impression that broadcasting is "over." Certainly, we have our challenges, compounded by a soft economy, an even softer ad market, and an absolute lack of credit. But if the rapid growth of our little group on LinkedIn is any indication, there is still plenty of interest out there in building broadcasting businesses.

If you fall into that category, join us on LinkedIn:

And finally, as with any social group, it is only as good as the input from its members. Please contribute your thoughts, news and ideas. We all want to hear from you.

Media Services Group

Friday, October 2, 2009

My New Group on LinkedIn: Radio/TV Station Buyers

If you are "LinkedIn," and are interested in buying a radio or TV station(s), join our new Group:

Radio/TV Station Buyers

It is a forum for news, ideas, and information on the station trading process and market. Click here:
And please be an active contributor!

Thursday, October 1, 2009

And yet more from the NAB: Larry Rosin's speech which got a lot of buzz

"We are fast becoming an industry of old men and an industry with a glaring HR crisis."

". . . this is at least the twelfth straight NAB Radio show with mostly the same increasingly older men saying that radio needs to develop a digital strategy."

"We will start aggressively recruiting the best podcasters, the best talents from YouTube or whatever other new media stars we can find and say: "Take six months, hone your craft further on our HD stations - don't worry no one is listening any way -- and invent the future of our medium."

More from the NAB Radio Show Panel: Tom Webster

Tom Webster (Edison Research) adds his thought-provoking comments from the NAB Radio Show: