Happy Holidays

Wishing you a happy & healthy holiday season! Sending all our best to you and yours.

Sunrise Broadcasting LLC Closes Transaction in Wilmington, NC (Press Release)

The sale of WBNE-FM and W240AS (FM Translator) in Wilmington, NC from Sea-Comm, Inc. to Sunrise Broadcasting, LLC has closed. The purchase price was $1,850,000.

George Reed of the Jacksonville office of Media Services Group served as the exclusive broker representing the Seller in this transaction. 

Thoughts on Station Pricing from Radio Ink’s Forecast 2016

Yesterday’s post dealt with some of the macro issues facing the radio station trading market going into the new year.  Today, I would like to offer some comments regarding station pricing.

The private marketplace today is trading in the 6.0x to 7.0x range, with outliers in the 5’s (primarily small markets) and occasionally approaching 8.0x (usually a strategic deal).  I believe that there is slight upward pressure on the multiples, due primarily to the lack of inventory.  My colleagues took an opposing view, citing the almost certainty of rising interest rates in our future.  They are correct that over the long term, multiples move opposite interest rates (i.e. when rates go up, multiples come down).  But interest rates are at historic lows, and we can absorb modest increases for some time before they exert sufficient pressure on multiples to make a difference.

At the present, there are qualified buyers, and there are lenders ready, willing, and able to finance transactions.  The only thing missing is good station inventory.  That will change (it always does).

The regulatory question came up, specifically whether or not a loosening of the ownership rules would help.  The short answer is “yes.”  Certainly an elimination of the subcaps would be a positive.  But the regulators seem to always lag marketplace realities.  We’ve been talking about the elimination of the antiquated cross-ownership rules for decades, yet they are still in effect.  Ironically, with the demise of the newspaper business and changes in the TV world, cross-ownership is no longer a big issue.  If the rules went away tomorrow, little would change.

One subject which didn’t come up, but probably should have, is broadcast towers.  There is a built-in pricing arbitrage which broadcasters should consider.

Thanks to Deborah, Eric, Drew, Peter, and the others who provided me the opportunity to participate in Forecast 2016.  It was great.

George
Media Services Group 

Crystal Ball Gazing at Radio Ink’s Forecast 2016

I enjoyed participating in this week’s Radio Ink Forecast 2016 in New York.  The event was well attended, and the panels informative and engaging.

My panel was entitled Prospects for Radio as an Investment in 2016: Wall Street or Main Street?  Moderated by Drew Marcus of Sugarloaf Rock Capital, the speakers included Brian McNeill, Founder and Managing General Partner of Alta Communications and Jerry Sargent, Middle Market Banking Head at Citizens Bank. Drew provided the Wall Street perspective, I talked deal making/station trading and values, Jerry talked about debt/banks, and Brian brought a private equity point of view.

Not surprisingly, there was a lot of talk about Cumulus and iHeart, specifically their balance sheet problems. My takeaway was that there was still time for Cumulus to resolve their operational issues, and work their way out of trouble.  Not so much for iHeart.

iHeart has a looming series of important bond payment due dates.  So far, they have masterfully been able to kick the can and refinance debt, albeit at much higher interest rates (with the result of a steadily increasing cost-of-capital).  But their bonds are now trading at a deep discount; that does not demonstrate much confidence on the part of the bond holders.

We talked about the impact on the industry if Cumulus and/or iHeart went through restructuring.  I believe that we would suffer through a (hopefully short) period of nuclear winter; station prices would suffer, and the lenders would likely pull back from the business.  But the thaw could get interesting.  If, for example, they decided to become a more CBS-esque type of company, focusing on the top 25 or even top 50 markets, the spinoffs into the hands of entrepreneurs more comfortable (and perhaps more skilled) in operating in small and mid-sized markets could result in a tremendous resurgence for the industry.  I contend that good operators, with healthy balance sheets, would line up to acquire the markets being spun off.

Brian indicated that there is not much love coming from the private equity world, but that family offices, with their more “patient money” approach, are an option.  On the other hand, Jerry is open for business on the debt side. Capital structures of at least 40% equity and 60% debt seemed to be a 

safe target.

Tomorrow, I will post some thoughts on station pricing which I shared with the group.

George
Media Services Group

Join us at Radio Ink's Forecast 2016

I will be on a panel called, "Do Investors Still Believe in Radio?"  Please join us in New York on November 17.  Click for details HERE.

George
Media Services Group

Financing the Future of Radio: Pillsbury at the Radio Show

Hope to see you in Atlanta!

http://www.commlawcenter.com/2015/09/financing-the-future-of-radio-pillsbury-at-the-radio-show.html

George

Alpha Media closes purchase of Morris Communications Radio stations (Press Release)

Alpha Media of Portland, Oregon announced today they have closed the purchase of radio stations from Morris Communications. The Morris purchase includes thirty-six radio stations located within the following markets; Topeka, KS; Salina, KS; Amarillo, TX; Palm Springs, CA; Anchorage, AK; Wasilla, AK; Grays Harbor-Hoquiam, WA and Wenatchee-Columbia River, WA.

When all pending deals are completed, it will bring the total number of stations owned by Alpha Media to two hundred, fifty-two. Chairman of Alpha Media, Larry Wilson commented on the acquisition, “I have enjoyed getting to know Mr. Morris and am thrilled to be adding stations that have been in the hands of such a successful and influential team. We look forward to expanding our Alpha family.”

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

Upon the successful completion of all pending transactions, Alpha Media, headquartered in Portland, Oregon will own 252 radio stations within 54 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.

Congratulations to Larry Wilson and Dean Goodman

Alpha Buys Digity Stations

Alpha Media has bought 116 stations in 26 markets from Digity LLC (subject to FCC approval).

I represented Alpha. Read the press release HERE.

George
Media Services Group

Great Radio article in Forbes

Doug Schoen is a political strategist often seen on the cable news shows.  He recently published an article on radio which merits a read.  Click here: Radio: The All-But-Forgotten Medium With The Biggest Reach.

George
Media Services Group

Nielsen TV Market Rankings

Here is a handy chart of the Nielsen TV markets:  CLICK HERE

George
Media Services Group

It has been a busy six months for radio

George
Media Services Group

Alpha Media to purchase Morris Communications Radio stations

Alpha Media of Portland, Oregon announced today they have entered into a definitive agreement to purchase radio stations from Morris Communications. Morris owns thirty-six radio stations in 8 markets including; Topeka, KS; Salina, KS; Amarillo, TX; Palm Springs, CA; Anchorage, AK; Wasilla, AK; Grays Harbor-Hoquiam, WA and Wenatchee-Columbia River, WA.

Larry Wilson, Chairman of Alpha Media will add the Morris markets to the ninety-nine stations currently in the Alpha Media portfolio. When all pending deals are completed, it will bring the total number of stations owned by Alpha Media to 135. Commenting on the acquisition, Wilson said, “What a wonderful thing it is to combine with such a fine stable of radio properties. They bring heritage radio stations to our platform that will truly enhance our growth opportunities extensively.”

William S. Morris III, Chairman and Chief Executive Officer of Morris Communications Company said, “We are pleased to enter into this agreement with Larry Wilson and his exceptional team. They are experienced operators that will maintain the ongoing success of these stations. We take comfort in knowing we have superior employees in each market that will continue to serve these wonderful communities.”

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

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

Upon the successful completion of all pending transactions, Alpha Media, headquartered in Portland, Oregon will own 132 radio stations and operate 3 additional stations under LMAs within 28 markets across the United States covering all formats including Top 40, Adult Contemporary, Spanish, Urban, News Talk, Sports, Rock, Country and more. In addition to the radio stations; Alpha Media owns the digital media and marketing company; Xapsis in Peoria, Illinois and the intimate performance venues, Skype Live Studio in Portland, Oregon and Alamo Lounge in San Antonio, Texas.

Join Our LinkedIn Group for Radio and TV Station Buyers and Sellers

If you are a LinkedIn user (and if not, why aren't you??!!), please consider joining our group: Radio/TV Station Buyers.  It is a group for station owners and prospective buyers. We have several thousand members, including many well known broadcasters. 

Our discussions are timely and relevant. Join us and participate regularly. It is a great resource for those of us in the business of buying, selling, and building value with radio and television stations.

George

Media Services Group

Alpha Media closes Fredericksburg, VA Cluster

Alpha Media of Portland, OR has closed on its purchase of four radio stations in Fredericksburg, VA from Free Lance–Star Publishing LLC.

Alpha purchased WFLS–FM, WNTX–AM, WVBX–FM and WWUZ–FM.

I represented the seller.

George
Media Services Group

Media Services Group Suite at the NAB Show

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

 # 5505.  

NAB Show Coming Soon

The Media Services Group suite will be at the Encore for the 2015 NAB Show (April 11-16).  If you are interested in a confidential meeting, please get in touch.

George
Media Services Group

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

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

Looking forward to catching up,

George
Media Services Group

Link to Tom Taylor's story today on station trading

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

Inventory.

George
Media Services Group

MSG Announces Sale of Free Lance-Star Radio Stations

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

FREE LANCE-STAR STATIONS TO BE SOLD

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

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

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

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

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

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

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

George Reed of Media Services Group brokered the deal.

Reed Bunzel Launches Radio 2015: The Year Ahead

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

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

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

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

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

George
Media Services Group

Sale of WMUV and WSOS in Jacksonville closed yesterday

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

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

I represented the seller in this transaction.

George
Media Services Group