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

Georgia Association of Broadcasters GABBY Honors Night Highlight Reel

The Georgia Association of Broadcasters put together a great video from their GABBY Honors night, including the Annual GABBY Awards for Broadcast Excellence. Honors night took place June 7, 2013 at Georgia Public Broadcasting Headquarters in Atlanta. Click HERE for the video.

George
Media Services Group

When You’re Hot, You’re Hot!

The television station trading market is on fire. It is a great time to be a buyer…or a seller.  Supply and demand are at work and all the stars are aligning to make this the perfect opportunity to own a TV station. TV station consolidation is being driven by the need for scale, increasing retrans revenue, the looming spectrum auction, and low interest rates (or at least, easier borrowing).

If you listen carefully, you’ll hear whispering about the similarity of the current TV market to the radio business boom in the mid-90s. In TV, scale matters and it seems everyone has arrived at that conclusion at the same time. No one is sitting still.  Being big is a big deal.

From an M&A perspective, buyers will pay for scale.  And it is an impressive list of buyers: Tribune, Gannett, Sinclair, and Gannett to name a few.  Peter Liguori (chief executive of Tribune) was quoted as saying, “Our investment thesis is simple:  Scale matters.”

Scale is more relevant than either the network affiliation or geography.  The “scale argument” is very valid with the bigger revenue and expense numbers in the larger markets. When operators have sufficient scale, they have leverage with their vendors across the spectrum.  Plus the scale brings with it more resources to develop top line revenue, more expense savings through consolidation, and generally, a lower cost of capital.

Most of the action happening in the TV business right now is in the top 50 DMAs, with the spectrum auction players focused on the top 35 (and primarily on second tier properties).  The Spectrum Auction has created an artificial floor to TV station values. On September 28, 2012, the FCC adopted the Broadcast Television Spectrum Incentive Auction NPRM. In order for wireless networks to keep pace with the demand for spectrum, the FCC proposed to free up the some of the TV spectrum via an auction.

They will be clearing and reallocating parts of the television spectrum. Owners of TV stations will have the option to voluntarily auction off their spectrum to the wireless industry.  A number of well-heeled spectators are betting on buying “today” and playing the auction “tomorrow.”  The rising tide from the auction is lifting all of the boats.  It, in effect, gives owners a “put” (and therefore downside protection) on prices.

TV may be following the radio consolidation path of the ‘90s, but likely with a better outcome.  TV is more easily scalable than radio.  It is a more transactional type of business model.  Radio has to be very concerned 24/7 with local programming (versus the network TV model).  There are far fewer TV stations than radio, so governance is easier.  TV may wind up looking more like the cable business, in terms of ownership/scale, than radio.

Multiples have moved higher for TV.  Banks are growing more comfortable with leverage on broadcasters’ balance sheets.  I believe that the currently trading multiple is in the range of 8x to 10x.

The icing on the cake may come from badly needed regulatory relief:

• More favorable cross-ownership rules
• Possible relaxation on foreign investment requirements

On the negative side, there is some discussion within the Beltway about eliminating the UHF discount and about tightening the rules on JSAs and SSAs.

There have been nearly $7 billion in TV station M&A so far this year and there’s approximately another $2 billion more projected to come before the end of the year.*  This market is hotter than it ever has been. Now is a great time to buy. Or sell.

*Source: UBS Investment Research

George
Media Services Group

Interested in the tower business?

A number of our readers own towers or are otherwise involved in the tower industry.  If you fit that description, you might enjoy our sister publication, Inside Towers.  Please click to check it out:

Inside Towers

Link to Inside Towers LinkedIn group

Link to Inside Towers on Twitter

George
Media Services Group

Join us at the Radio Show in Orlando!

The Radio Show is just around the corner, September 18 - 20, to be exact.  Media Services Group will have a suite at the Rosen Shingle Creek Hotel and will co-sponsor the Leadership Breakfast on Thursday morning (presented by Lew Paper of Pillsbury).  It should be a great convention.

If you would like to schedule a confidential meeting during the show, please get in touch.

Hoping to see you in Orlando,

George
Media Services Group

New York Times article on WBAI

Good article on the plight of WBAI, New York.  Thanks for the "ink!"

http://www.nytimes.com/2013/08/21/business/media/democracy-may-prove-the-doom-of-wbai.html?smid=tw-share

George

Sinclair Buying Allbritton Stations For $985M

Sinclair Buying Allbritton Stations For $985M

Another FAQ: What is “stick” value?

Q:  "What is “stick” value?"

A:  “Stick” value refers to the value of the station absent any revenue or cash flow. Think “franchise value” of the facility.

It is often calculated by the population covered by the station’s signal. We typically use the 60 dBu contour for FM stations, and the 2.0 mVm daytime contour for the AM facilities.

George
Media Services Group

Tribune Grabs Local TV Group for $2.7 B

Tribune Grabs Local TV Group for $2.7 B: Gannett's acquisition of Belo didn't last long as deal of the year, as ...

Another FAQ: How long does the sale process take?

Q:  "How long does the station sale process take?"

A:  Often, preparing the due diligence information prior to the marketing of the station(s) is one of the most time-consuming steps of a sale.
Most station marketing agreements with media brokers call for a duration of six to eighteen months, with twelve months being typical.
Time on the market varies. Like real estate, stations that are priced more closely to their Fair Market Value tend to sell the quickest.

The FCC approval process generally takes 60-90 days, with the Staff approval becoming “final” in an additional 40 days.  Any objections can delay the process.

George
Media Services Group

Another FAQ: What is MSG’s online due diligence room?

Q:  "What is MSG’s online due diligence room?"

A:  MSG uses a password-protected, online, due diligence room. You will be provided with a username and password after signing the appropriate NDA.  ALL OF OUR TRANSACTIONS ARE CONFIDENTIAL unless notified to the contrary. No one at the client or station level is to be contacted without permission. Each site typically contains a Descriptive Memorandum as well as more detailed information on real estate, financial information, employees, etc.

George
Media Services Group

Preparing your radio or TV station for sale

"New carpet and fresh paint" may work in real estate transactions, but more is required to effectively sell radio and television stations.

We have prepared a white paper entitled, "Preparing Your Broadcast Property For Sale."  It is available (free of charge) for download by clicking HERE (email registration required).

I hope that you find it useful.

George
Media Services Group

Another FAQ: Has the spectrum auction impacted the value of my television station?

Q:  "Has the spectrum auction impacted the value of my television station?"

A:  If your TV station is located in the top 35 DMA’s, there is a good chance that the “stick” value of your property has increased. New risk capital has been invested in TV stations with the expected payoff to come from spectrum auction proceeds.

George
Media Services Group

Large group on hand for the North Carolina Association of Broadcasters convention

Almost 300 people are on hand at the Grandover resort in Greensboro for the NCAB annual convention.  Here is a shot from tonight's award presentation dinner.

George

Another FAQ: Why are so many broadcasters selling their tower assets?

Q:  "Why are so many broadcasters selling their tower assets?"

A:  There are several valid reasons. The trading multiples on tower cash flow are significantly higher than the BCF multiples for radio and TV stations. Selling your tower allows you to monetize a valuable asset without hindering your station operation. Many owners use the funds to retire debt. It also shifts to tower upkeep, expense and burden from the broadcaster to a tower company.

Since a tower sale does not require FCC approval, cash can be raised quickly.

George
Media Services Group

NAB's Gordon Smith addresses Virginia broadcasters

NAB President and CEO Gordon Smith addressed a packed meeting room this morning at the Virginia Association of Broadcasters summer convention.  He delivered a well received message entitled, "Working in Unity to Lead Broadcasting to a Strong and Vibrant Future."

George
Media Services Group

Another FAQ: How do I get my station(s) ready for a sale?

Q:  "How do I get my station(s) ready for a sale?"

A:  It pays to get your house in order.  All buyers will need to review certain key documents at some point in the sale process. They tend to fall in these general categories:

• Contracts and leases
• Financial
• Real Estate
• Employees

Compile a list of all station contracts and leases (including tower leases, programming and talent agreements, maintenance, ratings, software, etc.).  Include start and end dates, monthly costs, and cancelation terms

Financial statements play a key role in the sale process; they are the foundation supporting the value of the business. They must be accurate and comprehensive.  Prepare a three year history of Income Statements. If non-operating expenses are contained in the expense line items, they should be identified for each year.

Summarize your real estate holdings in a spreadsheet (use, acreage, location, and property tax). Locate your most recent property tax bill and surveys.

Prepare an update employee list, including job title and compensation.

Review your Public File to ensure full FCC compliance.

George
Media Services Group

Off to the VAB and the NCAB

Hoping to see you in Virginia Beach at the Virginia Association of Broadcasters tomorrow. And then on to the North Carolina Association of Broadcasters this weekend in Greensboro.

Safe travels,

George
Media Services Group 

Another FAQ: How do I select an FCC attorney?

Q:  "How do I select an FCC attorney?"

A:  Get referrals. And look for an attorney with extensive experience with station transactions. Media Services Group is happy to provide you a list of FCC attorneys with a track record of completing deals.

The Federal Communications Bar Association (FCBA) is a volunteer organization of FCC attorneys.   A directory of members is available from the FCBA.

George
Media Services Group

Another FAQ: How do I hire a media broker?

Q:  "How do I hire a media broker?"

A:  Look for integrity, honesty, discretion, and experience.  Choose a professional who has completed a lot of deals. Refer to “Hiring a Media Broker” for an in-depth discussion.

Avoid brokers who promise a purchase price which defies logic. Many potential sale processes have gone awry when the seller hires a broker who promises a “sky high” price after ignoring broker prospects who presented honest expectations.

Whether or not you choose Media Services Group, it is a good idea to work with a firm belonging to the National Association of Media Brokers (NAMB).

George
Media Services Group

Puerto Rico Radio Show a success

The Puerto Rico Radio Show is taking place this weekend in San Juan, and the broadcasters are out in force.  Many stations are even doing remotes from the event.  Kudos to Association President (and President of UNO Radio) Luis Soto (seen here warming up the Friday luncheon crowd),

and Executive Director Jose Ribas.

George

Media Services Group

Another FAQ: Does Media Services Group represent buyers?

Q:  "Does Media Services Group represent buyers?"

A:  Only occasionally. Like real estate brokers, media brokers tend to work for the sellers. Media Services Group represents sellers on an “exclusive right to sell” basis in most cases.

George
Media Services Group

Gannett Acquires Belo In $2.2 Billion Deal

Gannett Acquires Belo In $2.2 Billion Deal

Another FAQ: What are appropriate “add-backs” to Broadcast Cash Flow?

Q:  "What are appropriate “add-backs” to BCF?"

A:  Interest, depreciation, amortization, and taxes should be added back to operating profit to determine BCF.

Buyers and sellers often differ on what additional expenses may be added back to BCF. Usually they are:
1) one-time-only expenses not normally seen in the ordinary course, and

2) owner-related charges which a new buyer would not expect to incur.

George
Media Services Group

Another FAQ: What exactly is BCF?

Q:  "What exactly is BCF?"

A:  Broadcast Cash Flow (“BCF”) is operating income, excluding interest, depreciation, amortization, taxes, and extraordinary items. Essentially it is the cash “left over” to service debt, pay for capital expenditures, pay taxes, or return to the owner(s).

George
Media Services Group

More FAQ's: Does Media Services Group sell other types of businesses?

Q:  "Does Media Services Group sell other types of businesses?"

A:  We only sell radio stations, television stations, wireless towers, and “new media” businesses.

George
Media Services Group

Another FAQ: What about arranging financing?

Q:  "How do I arrange financing to buy a radio station, TV station, or tower?"

A:  Download a copy of "Financing 101" HERE (registration required).

Unless you have a gold-plated resume with a solid management track record, you are probably not going to get the attention of institutional private equity investors. Your best bet to raise equity may be “angel” investors.

Know the difference between debt and equity.  Debt is a loan, usually secured by assets and often with personal guarantees. The money is less expensive than equity. Pricing is generally based on a negotiated number of basis points over LIBOR or the Prime Rate. Terms are usually five to seven years.  Banks generally preferred making loans greater than $10 million, though "home town" banks sometimes look at smaller deals.  SBA guaranteed loans may be an option. But documentation and red tape make them cumbersome.

Equity is ownership. Equity is riskier than debt, so equity investors expect a higher return on their money. In the event of a liquidation, the debt holders generally get their money first; anything left over (sometimes nothing) goes to the equity holders. Pricing reflects this inherent risk. Most equity wants to “cash in” within five years.

Seller financing is sometimes an option.  Typically seen most often in smaller deals, the seller functions as the bank. The buyer puts up a down payment (which must be enough for the seller to pay off his lender if there is one) and gives the seller a note for the balance. Terms are negotiable.

Media Services Group's Providence office is experienced in consulting clients on sourcing the capital markets.

George
Media Services Group

Radio Disney to sell stations

According to Variety, Radio Disney has put six AM and one FM station in small and mid-sized markets up for sale.  Click HERE for the article.

George
Media Services Group

GAB's Honors Night on Friday

The Georgia Association of Broadcasters annual Honors Night Program is this Friday at 6pm.  Unfortunately, I am traveling and will miss it.  Be there if you can!


http://www.gab.org/news-events/

George
Media Services Group

Sinclair Buys 6 Titan Television Stations

Sinclair Buys 6 Titan Television Stations

Townsquare buys AOL Music: Radio Ink Magazine

Click HERE.

FAQ's about radio and television station trading

Over the course of the next few weeks, I plan to post some of our most frequently asked questions (along with our most frequent responses!).  Please feel free to add to the conversation with your own questions. 

Q:  "I’m new to this. Where can I get pointers on buying my first radio station?"

A:  Consider attending the NAB Radio Show. You might also take a look at the books in the NAB Store. Refer also to this white paper (registration required). I address first-time-buyers on occasion in this blog, so you may want to consider subscribing.  You can check out a post HERE ("Buying Your First Station") from a few years ago which is still relevant today.

George
Media Services Group

Income producing towers available for sale

We have income producing towers for sale in FL, AL, OK and TX.  If you are interested, please contact me.

George
Media Services Group

Monetize your tower assets

The tower industry is enjoying unprecedented growth with no end in sight. The carriers are continuing to build out and improve their networks. And the major tower consolidators have healthy appetites and deep pockets.

This has created enormous opportunity for broadcasters with undermanaged tower assets, and small and mid-sized tower companies. Many are making the decision to monetize their tower assets and they are being rewarded with excellent sale prices.

Media Services Group delivers “top dollar’ for our tower clients. We run a proven sale process, utilizing our database of tower buyers in tandem with our secure online data room. We know the tower business. Several of our partners own and manage towers. One built up and sold a significant tower portfolio.

Contact us for a confidential discussion about the value of your towers. Our tower marketing process is both efficient and effective. Closings often occur within 90 days of our engagement. Let us show you what we can do for you.

George
Media Services Group

Inside Radio: Spring blossoming of mid-market deals

"Inside Radio" ran an interesting story today on the state of radio station trading ("Spring blossoming of mid-market deals"). The article shared a few of my own thoughts and observations. You can check it out by clicking HERE.

George
Media Services Group

Eric Rhoads and Deborah Parenti staged their fifth annual Radio Ink Hispanic Radio Conference last week in Coral Gables.  I attended to catch up on the growth story of Hispanic media in general, and radio in particular.  It was my return visit, having last participated five years ago.  They put on a great event at a wonderful venue (The Biltmore).

Geraldo Rivera (Cumulus Media Networks and the Fox News Channel) keynoted with an impassioned presentation on immigration reform.  There were a number of excellent panels.  Larry Rosin of Edison Research showed that Hispanic targeted media is benefiting from positive demographic trends.  It appears to me that Hispanic radio will continue to be a growth business well into the future.

The show was well attended and provided an opportunity to say hello to a number of friends.  You may want to consider putting it onto your calendar for next year.

George
Media Services Group

Radio Ink's editor Ed Ryan with Geraldo

JVC Media to purchase Asterisk Communications' Florida Radio Group

JVC Media, the leading independent, locally owned radio broadcaster on Long Island, has entered into an agreement to buy Asterisk Communication’s five Florida FM  radio stations, WTRS, WMFQ, WXJZ, WBXY and WYGC.  JVC owns 4 FM radio stations on Long Island, WPTY, WBON, WJVC, WRCN and operates Long Island Events, which manages the 7,000 seat outdoor entertainment venue known as the Pennysaver Amphitheater.  JVC was formed by broadcasting veterans John Caracciolo and Victor Canales and is backed by Northwood Ventures. 

102.3 WTRS is a heritage Country station serving the Gainesville/Ocala Florida market with a legendary track record of success and community involvement.  Hot AC WMFQ, Q92 serves North Central Florida as one of the top rated music stations in the area thanks to its great signal and award winning staff. WXJZ is a unique FM station serving the Gainesville area with a smooth FM music mix format that has developed a deeply devoted following. WBXY and WYGC, both Gainesville FM stations make up the rest of this market dominating cluster.

JVC Media has been in a rapid growth mode, recently expanding on Long Island with its entertainment and broadcast division adding jobs and staff and working hard to make radio local and community friendly once again.

JVC Media CEO, John Caracciolo said, “We are honored and privileged to welcome these top performing radio stations into the JVC family. The prior owner of these stations was committed to community service, high quality broadcasting and creating an excellent work environment for its staff, and we are proud to be able to continue the tradition that Asterisk started in this great market”.

JVC Media VP, COO Victor Canales added, “We love this radio market, and we are excited to continue the trend of fun, local radio in North Central Florida”.  “We plan on adding staff in Florida and New York and to make a big splash with marketing and programming when we begin operating the stations”, he added.

I represented the seller, Asterisk Communications.  Congratulations to John and Fred on a great transaction!

George
Media Services Group


















 











 

Tallgrass Broadcasting, LLC sells to Tejas Broadcasting Ltd., LLP

Tejas Broadcasting Ltd., LLP has agreed to purchase KMUL AM and KICA FM radio stations from Tallgrass Broadcasting, LLC (subject to FCC approval).  KMUL AM and KICA FM are licensed to Farwell, Texas. 

 

The Seller, Tallgrass Broadcasting, is in receivership with David Rhoades of Tulsa acting as Receiver.  The Buyer, Tejas Broadcasting, is headed by Jim Anderson and has other broadcast interests in Corpus Christi and Amarillo.

Bill Whitley of the Dallas office of Media Services Group served as the exclusive broker representing the Receiver.

 

Congratulations!

 

George

Media Services Group

White papers available online

Here are some online resources which you might find useful:

"Buying Your First Radio Station" (white paper). Click HERE to download (registration required).

"Financing Broadcast Properties 101" (white paper). Click HERE to download (registration required).

Both papers are pretty basic, but may be useful to someone considering station ownership for the first time.

George
Media Services Group

Spectrum Auction's impact on TV station values

Many television station owners are asking, "How does the FCC's spectrum auction impact the value of my station?"

It is a good question.  And for many owners, the answer is equally good.  Many are considering the option of monetizing some or all of their TV assets to capitalize on the increasing prices. Several have already done so.

If you would like to confidentially discuss the value of your station in today's market, please give me a call.  904.285.3239

 

For a background post from David Oxenford about the Congressional authorization for the FCC Incentive Auctions, click HERE.

George

Media Services Group

Radio Ink: When Jim Met Larry -- It Ended With A Handshake

Radio Ink posted a great interview with Jim Ingstad about his recent deals with Larry Wilson and Duke Wright in Fargo.  Click HERE to listen.

George
Media Services Group

And while we're issuing congratulations (see earlier post) . . .

Congratulations and best wishes to our own Eddie Esserman and he joins the NAB Board. 

Eddie and four others have just been named to the Board:

• Russell Perry, Chairman, Perry Publishing and Broadcasting Oklahoma City, OK
• Bob Pittman, CEO, Clear Channel, New York, NY
• Jeff Simpson, President & CEO, Bonneville International Corp. Salt Lake City, UT
• Margaret Perkins, President / CEO, First Natchez Radio Group, Natchez, MS

We wish them much success in helping to lead our industry.

 

George

Media Services Group

Going to the Hispanic Radio Conference?

Eric Rhoads and Radio Ink are staging their Hispanic Radio Conference May 16 and 17 at the Biltmore in Coral Gables.  This is a great event for anyone involved with Hispanic radio.  I plan to attend again this year.  If you are interested in getting together during the event to discuss station values and the trading marketplace, please get in touch.

George
Media Services Group

Congratulations to Duke Wright, Jim Ingstad and our own Jerry Johnson!

Midwest Communications has completed the acquisition of the assets of Radio Fargo-Moorhead, the parent company of KFGO-AM, KVOX-AM, KBVB-FM, KMJO-FM, KRWK-FM and WDAY-FM for $25 million.

Radio Fargo-Moorhead is headed by Jim Ingstad. Midwest Communications, headed by Duke Wright, owns 47 radio stations in Wisconsin, Minnesota, Michigan, Illinois and Indiana.

 
Jerry Johnson of Media Services Group’s Minneapolis office represented the seller in this transaction.

Well done!

George
Media Services Group

LinkedIn Group on station trading

There is a group on LinkedIn "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 stations and the discussions are relevant and timely.  We have almost 2,300 members, including station owners, lenders, private equity professionals, and broadcast attorneys.

If you would like to join us, please click HERE.

George
Media Services Group

NAB Show 2013 - From a media broker's perspective

With the bags finally unpacked and the body back on Eastern time, I would like to share some thoughts from the 2013 NAB Show in Las Vegas.  My observations are from the perspective of a media broker specializing in the purchase and sale of radio/TV stations and communications towers.  No doubt that this view of the convention differs from those of  a broadcaster.  For one thing, we spent most of the time sequestered in meetings in our suite at the Encore and very little of it at the Convention Center.

This year, I attended the Rain Internet radio conference on Sunday, at least the first half of it (our Media Services Group meeting filled the afternoon).  Kurt Hanson does a good job with the conference.  In particular, I enjoyed the dashboard discussion.  Paul Jacobs was on that panel; you can check out his report HERE.  While the dollars are still relatively small, the growth rate is not.  I will plan to attend Rain again in the coming years.

My partners and I convened on Sunday afternoon to discuss the state of the broadcasting industry, what is happening in the media brokerage business, and where pricing multiples are for broadcast properties.  For radio, broadcast cash flow multiples are mostly in the 6x to 7x range, with "outliers" in the 5s on the low side and as high as 8x for the upper limit.  TV deals are bringing higher multiples than radio.  Higher retrans fees, a blow-out political year in 2012, and spectrum auction speculation appear to be fueling the TV appetites.  Throughout the convention, there was a good deal of discussion about the TV spectrum auction, and the NAB featured a panel on the subject.

We expected robust activity in our suite and we were not disappointed (most of our meetings are set up in advance).  The suite was busy all day on Monday and Tuesday and we even had a few meetings on Wednesday morning.  History has shown that such activity is a good predictor of trading action in the coming months.

There is no shortage of station buyers and sellers; all we are missing are the lenders.  Though slowly but surely, they too are returning.  It is worth noting that GE threw a party at the Show this year after being absent for the last three or four years.  The broadcast lending that is going on appears to be in the 3x to 4x range.

Several of us attended Erwin Krasnow's (Garvey Schubert Barer) annual breakfast Monday morning at the Las Vegas Country Club.  Thanks, as always, to Erwin, John Pelkey and Melodie Virtue for their hospitality.  Matthew Berry, Chief of Staff for FCC Commissioner Ajit Pai, made an interesting presentation.  Among other things, he addressed Commissioner Pai's interest in saving AM radio.  That too received a lot of "buzz" throughout the week, particularly following the Commissioner's panel on the subject.

In addition to GE's party mentioned above, Wiley Rein also threw a nice reception.  As always, it was well attended by the broadcasters, brokers and bankers.

No NAB Show is complete without attending the Broadcasters Foundation breakfast on Wednesday morning.  It is a great organization doing wonderful work:

"The mission of the Broadcasters Foundation of America is to improve the quality of life and maintain the personal dignity of men and women in the radio and television broadcast profession who find themselves in acute need."

Phil Lombardo and Jim Thompson hosted the event, awarding the Ward L. Quaal Leadership Awards to:

• Skip Finley
• David Kennedy
• Bob Schmidt
• Alan Frank
• Charles Osgood
• Mike McKinnon

The Lowry Mays Excellence in Broadcasting Award went to Stanley S. Hubbard.

That's my story from Las Vegas.  See you at the Radio Show this fall in Orlando!

George
Media Services Group

Valerie Geller has penned an insightful piece in Radio World about radio's future.  Click here to check it out: 

You've Got to Spend It to Make It

George
Media Services Group

The Media Services Group suite at the NAB Show is in the Encore Tower:

 # E3305.

Please stop by and say hello.

George
Media Services Group

Tomorrow is our NAB travel day.  Media Services Group will be in residence at the Encore tower suites.  Unfortunately, I do not yet know the suite number but will post it over the weekend.

If you want to confidentially discuss valuations and trading of radio and TV stations or communications towers, please get in touch.

Safe travels to Las Vegas and have a great convention!

George
Media Services Group
Cell:  904-631-7093

Good article from John Pelkey in RBR on "Sizing Up the Opposition."

George
Media Services Group

This blog is devoted to owners of radio/TV stations or persons interested in getting into ownership.
As a station broker, I constantly look for deals which might be ideal "first stations" for first-time-buyers.  I would like to highlight some of these here.  Most of these opportunities include the possibility of owner financing. Confidentiality requires the descriptions to be generic, but if you are interested, contact me for an NDA.

• Christian music FM in a rated, southeast market
Over $500,000 in revenue
Priced for a quick sale
Asking $700,000

• Three FMs and one AM cluster in the Mid-Atlantic region 
Attractive, Arbitron rated market 
Net revenue between $800,000 and $900,000, with positive cash flow

• Alabama cluster with four FMs and two AMs
Revenue between $800,000 and $900,000
Cash flow budgeted to be slightly negative this year
Good upside potential
Asking price: $1,500,000

• FM station and AM facility with FM translator in midwest market
Excellent competitive position
2013 revenue budgeted at $1,850,000 with BCF of over $600,000
Asking $4,000,000

• AM/FM combo in midwest small market
Revenue in excess of $350,000
All reasonable offers considered

• 3 FM cluster in southeast Georgia
Dominant competitive position
Owner will consider selling financing and will consult following the closing
Asking price: $1,400,000

• Profitable AM/FM radio station combo in Georgia being sold under Distress Sale policy
Stations expected to sell under the FCC's Distress Sale policy which calls for a sale to a qualified entity for a maximum sale price of no more than 75% of appraised value
Gross revenue of almost $400,000
Appraised for $875,000
Sale price: $656,250

• 2 FMs in the deep south.
Around $500,000 in revenue.
Positive Broadcast Cash Flow.
Seller financing
$1,500,000

George
Media Services Group

Trip Savery shares his thoughts

Greater Media's Trip Savery (Charlotte) shares 23 interesting observations in Fred Jacobs' blog:

CLICK HERE

George

Media Services Group

David Oxenford has published his annual Broadcaster's Calendar.  Click: HERE for a copy.

George
Media Services Group

Sad news from Art Camiolo:

Our good friend, Dick Sharpe passed away yesterday.

Information on services is available at Weigand Brothers Funeral Directors, 519-746-4484.

Visitation is Thursday and Friday and funeral is on Saturday.

RIP Dick. We'll miss you.