Wednesday, June 29, 2011

Randy gets the old band together in Chi-town

Some of you may have seen my recent post on LinkedIn’s Radio/TV Station Buyers group:

“Randy Michaels is getting the old band back together in Chi-town. This time with a horn section. Second thoughts, Tribune?”

And Dick Taylor added on Twitter: “Horn section? More like a brass band. It will truly be the ‘noise you can't ignore.’"

Randy has his fans and detractors (I am solidly in the former camp), but whichever way you fall, there is no denying his impact on our industry. His return to station ownership after being unceremoniously dumped by the Tribune Board has attracted a lot of attention. And I believe that he will make a major impact in the Chicago and New York radio markets (and perhaps others down the road).

A number of industry heavy-weights have already joined the band. John Gehron is “Chairman, Advisory Board,” and Walt Sabo was named Chief Operating Officer. John was previously recruited by Randy to run the Chicago cluster for Clear Channel. In addition, Liz Aiello, former SVP of Broadcast at Martha Stewart Living Omnimedia, was recruited as Vice President, New York, and Andy Friedman as VP/Internet Initiatives. Friedman was most recently VP/Interactive Content at Tribune. Finally, Greg Janoff joins as EVP of Revenue; he was previously VP, Branded Entertainment Sales at MyDamnChannel/RAMP Video.

In true Randy Michaels style, Merlin Media has posted the following “Rules for Merlin Magicians”:

Rule # 1 – Use your best judgment.
Rule # 2 – See rule number one.

Merlin Media LLC is buying Emmis Communications’ WKQX-FM (101.1 MHz, Chicago, IL), WLUP-FM (97.9 MHz, Chicago, IL) and WRXP-FM (101.9 MHz, New York, NY). It is backed by GTCR, a Chicago private equity firm.

Our own Stephan Sloan did some good work analyzing this transaction. Steph reckons that the actual purchase price came in between $157 million and $158 million, payable as follows:

$110 million cash plus $47 million preferred equity, or
$130 million cash plus $28 million preferred equity

A number of different purchase price estimates have been floated in the press. The difference seems to rest with the valuation of the common equity kicker being retained by Emmis. We have no crystal ball for the potential future value of the common piece. If things go well with the operation, Emmis stands to reap the benefit of the ride. In our view, the purchase price represents full present value for the seller (Emmis) and is not in any way depressed. By the same token, if Randy can work his magic (again), he could build a lot of value quickly.

Prior to the announcement, we valued these stations at $155 million:

New York stick value: $71,000,000
Chicago stick value: $42,000,000

Though we were off by $1 million to $2 million, these valuations yielded stick values of $4.62 per pop in New York and $6.13 per pop in Chicago (based on the stations’ 60 dBu contours). We have been advising our clients for the last several months that stick values were running between $4 and $6, certainly in line with this transaction. And while a long way from the former high in the low $20, it is worth noting that the New York deal represents a full 50% increase over the last stick sale (WQXR) in the market.

Bottom line: I'm glad I don't work for Tribune.

Media Services Group

Monday, June 13, 2011

Paul Stone named "Broadcaster of the Year" by GAB

Randy Gravley (station owner and NAB Board member) and I had the pleasure Saturday night of presenting our friend, Paul Stone, with an award from the Georgia Association of Broadcasters naming Paul "Broadcaster of the Year."

Paul is a "broadcaster's broadcaster." A graduate of the University of Georgia, he served as an officer in the U.S. Air Force before starting both the Georgia Radio News Services and the Florida News Network. He co-founded Southern Broadcasting with this late partner, Charles Giddens.

Southern grew to own stations in Georgia, Alabama, and the Florida panhandle. He bought all of the outstanding stock in the company in 2001 and became President and CEO of the company. Over the years he became one of the most successful station owner-operators in the business, building his stations on a commitment to serve their local communities.

Along the way, he has given a number of broadcasters their "start," and continues to be a mentor to many. He, along with Suzanne, are persons of great generousity, both to employees and to the many charities, local institutions, and civic organizations they support.

There is no deserving recipient of the GAB's "Broadcaster of the Year" award. I am proud to be Paul's partner (Monticello Media) and friend. Congratulations!

Media Services Group

WHJX (FM) (Baldwin/Jacksonville, FL) sale closes

West Jacksonville Baptist Church has completed the acquisition of the assets of Radio Station WHJX (FM), licensed to Baldwin, (Jacksonville) FL, from Tama Broadcasting for $1,000,000.

Eddie Esserman of Media Services Group’s St. Simons Island, GA office represented the West Jacksonville Baptist Church in this transaction.

Congratulations to West Jacksonville Baptis Church and to our own Eddie Esserman on the completion of the deal.

Media Services Group

Friday, June 3, 2011

Another day, another deal: more evidence of a pickup

On the heels of a couple of closings this week, today we announced another radio deal:

Mississippi Broadcasters, LLC (Clay Holladay, President) has agreed to purchase the assets of the following Meridian, Mississippi radio stations from Clear Channel Radio*:

WMSO-FM, licensed to Meridian
WZKS-FM, licensed to Union
WYHL-AM, licensed to Meridian
WJDQ-FM, licensed to Marion
WHTU-FM, licensed to Newton

The stations are currently programmed by URBan Radio under a Time Brokerage Agreement.

Concurrent with the acquisition, New South Communications, Inc. has agreed to purchase the assets of WJDQ-FM and WHTU-FM and Educational Media Foundation has agreed to purchase the assets of WMLV-FM from Mississippi Broadcasters, LLC. Mississippi Broadcasters, LLC will donate WKZB-FM to the Meridian Community College Foundation.

Closing on all such sales is subject to FCC consent and standard closing conditions.

I represented Clear Channel/URBan Radio in this transaction. Congratulations and thanks to Clear Channel, URBan Radio, and Clay Holladay. May the thaw continue!

Media Services Group

Katz: The Radio Primer

Katz has released a great report called "The Radio Primer: Highlighting radio's position within the 2011 media universe." This is MUST reading. Download it HERE.

Media Services Group

Thursday, June 2, 2011

Deal market coming to life: 2 closings

The station trading market continues to show increasing signs of life. We closed two deals this week:

1) JWBP Broadcasting completed the acquisition of the assets of radio stations KBCE-FM, licensed to Boyce, LA and KMXH-FM, licensed to Alexandria, Louisiana, from Trinity Broadcasting d/b/a URBan Radio. The sale price was $600,000. I represented the seller (URBan Radio).

2) Houghton Community Broadcasting Corporation closed the acquisition of the assets of radio stations WOLV-FM, WCCY-AM, and WHKB-FM, Houghton, Michigan, from Heartland Communications Houghton License, LLC. The price was $535,000.

Jerry Johnson and Tom McKinley of Media Services Group represented the seller in this transaction. Congratulations to all of the parties!

Media Services Group