Can we just end 2016 today?
That's a refrain many media brokers may be saying.
"This was mostly portfolio tweaking," says George Reed, a media broker with Media Services Group based out of the Jacksonville, Fla., office. "Inventory is, and has been, limited."
But the next 12 months look good, says Reed and another broker who shared their thoughts on 2017 with RBR + TVBR.
Read the full article here (login required).
Showing posts with label TV. Show all posts
Showing posts with label TV. Show all posts
Wednesday, December 21, 2016
Tuesday, December 20, 2016
Guest Blogger Stephan Sloan: Contest Rules
Few tournaments have rules for those no longer competing. The Incentive Auction does in the form of 47 C.F.R. § 1.2205(c), the Prohibited Communications Rule. For more than 800 stations not needed in Stage 1 the price of entering the tournament is the continuing burden of the Prohibited Communications Rule. Station owners interested in exploring the sale of their station are presently challenged to provide information to prospective buyers concerned that they will be thought to be communicating elements of their bidding strategy or outcome inthe auction. Buyers are dubious of the effort or resources they should expend to pursue a station which could be frozen in the auction.
I have been pleased to support efforts to identify stations that should be waived from this rule as they no longer represent meaningful data for rational models of auction outcomes in the current and later Stages. I remain hopeful that recognition of the public good for the purposes of community service and repack as well as the negligible value to the remaining competitors will guide the FCC to a relaxation or limitation of the Prohibited Communications Rule.
For those wishing to pursue the purchase of a station that elected to participate in the Incentive Auction I can offer data on the probability of a station being frozen. Good modeling provides buyers a rational understanding of the probability a station was frozen in the Incentive Auction and on that basis, decide if they should pursue it or not. Buyers can make their own assessment without input from the station owner, honoring the Prohibited Communications Rule.
We are clearly past halftime in the Incentive Auction tournament. Like in the final quarter of a game, I think the highest stakes calls are being made now in Stage 4. Notre Dame football coach Lou Holtz encouraged his players; “How you respond to the challenge in the second half will determine what you become after the game.” I hope I can assist some of you or your clients with successful answers to these challenges.
Director, Media Services Group
401.454.3130
Monday, December 19, 2016
Guest Blogger Stephan Sloan: Tournament Television
The Incentive Auction is looking more like a tournament than an auction to me.
In the early stages of the Incentive Auction the perception of winning this tournament, that is receiving more value for your television license than it was otherwise worth, was probable for many stations. Licensees who were allowed to participate piled in to the contest and expected a victory. This behavior can be seen as the success of the opening bid prices and the distribution accomplished by the FCC and the Greenhill Report.
Like in tournaments, participants’ assessment of victory evolves as time elapses. The huge spread between the Stage 1 Clearing Target and Net Auction Proceeds was a strong indication to competitors that multiple stage progressions would be likely to close that gap. Many models pointed towards Stage 4 as the first opportunity for validation.
For a participant, anticipation of a Stage 4 result yields a radically different expectation of winning both in terms of probability and magnitude. It can be modeled that 270+ fewer stations are frozen by Stage 4 and the amounts paid to the winning licensees is reduced by more than 70%. The tournament by Stage 4 is a different contest. Without confidence, the Incentive Auction of Stage 4 does not create hope for winning but raises the question what does loosing look like?
I believe that as the stages have progressed many television station owners have turned away from further assessment of their reserve price (a metric for winning) and have focused instead on post Incentive Auction plans. To illustrate this point, Stage 1 results promised each of two or more duopoly owners in a market a winning scenario of each of them freezing one station in the auction and receiving a generous sum of money, participation in the tournament is rational. After the auction, each of the duopoly owners could be winners and the competitive landscape in the market would remain as each duopoly would likely now be represented by a single station (and a large bag of cash).
Stage 4 likely presents asymmetric results where all of the stations offered by the duopoly operators would not be needed. Outcomes include some duopolies remaining intact while another may freeze a station. Is a definition of winning being the only duopoly to freeze and facing post Incentive Auction competition with half the bandwidth of the competition (and a smaller bag of cash)? Pricing this scenario is complicated as well where reserve prices become relative to the competition rather than a function of enterprise value.
How do you like the tournament so far?
Stephan Sloan
Director, Media Services Group
401.454.3130
ss@mediaservicesgroup.com
In the early stages of the Incentive Auction the perception of winning this tournament, that is receiving more value for your television license than it was otherwise worth, was probable for many stations. Licensees who were allowed to participate piled in to the contest and expected a victory. This behavior can be seen as the success of the opening bid prices and the distribution accomplished by the FCC and the Greenhill Report.
Like in tournaments, participants’ assessment of victory evolves as time elapses. The huge spread between the Stage 1 Clearing Target and Net Auction Proceeds was a strong indication to competitors that multiple stage progressions would be likely to close that gap. Many models pointed towards Stage 4 as the first opportunity for validation.
For a participant, anticipation of a Stage 4 result yields a radically different expectation of winning both in terms of probability and magnitude. It can be modeled that 270+ fewer stations are frozen by Stage 4 and the amounts paid to the winning licensees is reduced by more than 70%. The tournament by Stage 4 is a different contest. Without confidence, the Incentive Auction of Stage 4 does not create hope for winning but raises the question what does loosing look like?
I believe that as the stages have progressed many television station owners have turned away from further assessment of their reserve price (a metric for winning) and have focused instead on post Incentive Auction plans. To illustrate this point, Stage 1 results promised each of two or more duopoly owners in a market a winning scenario of each of them freezing one station in the auction and receiving a generous sum of money, participation in the tournament is rational. After the auction, each of the duopoly owners could be winners and the competitive landscape in the market would remain as each duopoly would likely now be represented by a single station (and a large bag of cash).
Stage 4 likely presents asymmetric results where all of the stations offered by the duopoly operators would not be needed. Outcomes include some duopolies remaining intact while another may freeze a station. Is a definition of winning being the only duopoly to freeze and facing post Incentive Auction competition with half the bandwidth of the competition (and a smaller bag of cash)? Pricing this scenario is complicated as well where reserve prices become relative to the competition rather than a function of enterprise value.
How do you like the tournament so far?
Stephan Sloan
Director, Media Services Group
401.454.3130
ss@mediaservicesgroup.com
Wednesday, June 29, 2016
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
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
Tuesday, June 28, 2016
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.
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.
$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
Director, Media Services Group
401.454.3130
ss@mediaservicesgroup.com
Wednesday, June 22, 2016
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
Stephan Sloan
Director, Media Services Group
401.454.3130
ss@mediaservicesgroup.com
Wednesday, June 15, 2016
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
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
Monday, June 13, 2016
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
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
Tuesday, June 7, 2016
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
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
Friday, April 29, 2016
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
Tuesday, January 12, 2016
LR Telecasting Acquires KMYA-DT and KMYA-LP (Press Release)
Veteran
Radio and Television broadcaster, William Pollack, of Memphis, TN, is expanding
his television holdings, entering the Little Rock market, with his acquisition
of KMYA-DT, Camden/Little Rock, and KMYA-LP, Sheridan/Little Rock. The acquiring company, LR Telecasting, is
paying $2,750,000* to Seller, I Square Media, LLC.
Pollack also owns KLAX-TV and KWCE-LPTV in Alexandria, LA, and KIEM-TV, in Eureka, CA, as well as a cluster of radio stations in Kennett and Caruthersville, MO. I Square Media has no other broadcast interests.
Pollack also owns KLAX-TV and KWCE-LPTV in Alexandria, LA, and KIEM-TV, in Eureka, CA, as well as a cluster of radio stations in Kennett and Caruthersville, MO. I Square Media has no other broadcast interests.
For more information:
Bill Cate
501.727.5100
cate@mediaservicesgroup.com
*Pending FCC Approval
Sunday, July 19, 2015
Monday, April 20, 2009
NAB update
From the NAB . . .
If you're looking for Media Services Group, we're at the Bellagio (suite # 32057). Suite traffic from prospective buyers and sellers is off; probably the lowest traffic in twenty years of NAB's.
On the positive side, great dinner at Ferraro's (West Flamingo) Saturday night.
Attended the Garvey Schubert Barer breakfast this morning. Thanks to Erwin Krasnow for the hospitality. It was well attended. Ivan Braiker spoke about Hip Cricket (texting).
Banks are scarce. Not sure that any of them are doing any new lending. Some job casualties in the media lending ranks. Bad.
Attended the opening reception. David Rehr spoke about Radio 2020 and Radio Heard Here; discussed the digtal TV transition and mobile TV.
Interesting time for the business. Radio is being re-set.
George
Media Services Group
If you're looking for Media Services Group, we're at the Bellagio (suite # 32057). Suite traffic from prospective buyers and sellers is off; probably the lowest traffic in twenty years of NAB's.
On the positive side, great dinner at Ferraro's (West Flamingo) Saturday night.
Attended the Garvey Schubert Barer breakfast this morning. Thanks to Erwin Krasnow for the hospitality. It was well attended. Ivan Braiker spoke about Hip Cricket (texting).
Banks are scarce. Not sure that any of them are doing any new lending. Some job casualties in the media lending ranks. Bad.
Attended the opening reception. David Rehr spoke about Radio 2020 and Radio Heard Here; discussed the digtal TV transition and mobile TV.
Interesting time for the business. Radio is being re-set.
George
Media Services Group
Thursday, April 16, 2009
Workouts: Two Perspectives
Much like the early 1990’s, “workout” is now a prominent term in the broadcasting industry vernacular. A workout refers to a non-performing loan which has been moved into a lender’s “workout” department for collection. The process is usually resolved in one of two ways: 1) the loan is restructured under more lenient terms, or 2) assets are sold to repay the outstanding debt.
As you might suspect, borrowers and lenders have two very different perspectives of the workout process. Without taking sides, I will attempt to present an overview.
Broadcasters
The broadcaster wants to restructure the loan(s) on terms which allow him to pay back the obligation from the business’ free cash flow. Generally, they want to buy time. This often means deferred payment terms, a lower interest rate, debt forgiveness, equity infusion, and possibly asset sales. An alternative (but a difficult one when credit is “frozen” as it is now) is to simply refinance the loan with a new lender.
The broadcaster takes the position that the current problems are a “bump in the road,” and given time, effort, and flexibility on the part of the lender, everything will work out just fine.
If the lender refuses to negotiate acceptable restructured terms, the war escalates. A Chapter 11 bankruptcy filing is in the broadcaster’s arsenal to stave off foreclosure (at least temporarily).
Lenders
Lenders simply want their money back. And they don’t much care how it happens. Ideally, they would like to see the borrower/broadcaster refinance their debt with a new institution. Failing that, they want the assets sold . . . immediately. If the broadcaster refuses to cooperate (in their view), the lender might take steps to have a receiver appointed, charging the receiver to liquidate the company.
If the lender believes that the problems are temporary, they may agree to restructure the note, generally collecting fees for the restructure agreement, and usually with provisions that they will be made “whole,” perhaps getting additonal security.
Lenders often (but not always) want to avoid the bankruptcy court. At times, they can negotiate a forbearance agreement with the borrower to agree to allow a receiver to be appointed, perhaps with the broadcaster’s agreement as to who the receiver will be.
And now, a word from our sponsor. The choice of a receiver is critical. The ideal receiver has M & A transaction experience as well as station operating expertise. That is a rare combination. You can probably count on one hand the number of firms serving the broadcasting industry who have that expertise (Media Services Group is one; Larry Patrick’s company is another). Unfortunately, a number of “consultants” hang out their shingles in every downturn; check the track records before hiring workout expertise.
Those are my thoughts, what are yours?
George
As you might suspect, borrowers and lenders have two very different perspectives of the workout process. Without taking sides, I will attempt to present an overview.
Broadcasters
The broadcaster wants to restructure the loan(s) on terms which allow him to pay back the obligation from the business’ free cash flow. Generally, they want to buy time. This often means deferred payment terms, a lower interest rate, debt forgiveness, equity infusion, and possibly asset sales. An alternative (but a difficult one when credit is “frozen” as it is now) is to simply refinance the loan with a new lender.
The broadcaster takes the position that the current problems are a “bump in the road,” and given time, effort, and flexibility on the part of the lender, everything will work out just fine.
If the lender refuses to negotiate acceptable restructured terms, the war escalates. A Chapter 11 bankruptcy filing is in the broadcaster’s arsenal to stave off foreclosure (at least temporarily).
Lenders
Lenders simply want their money back. And they don’t much care how it happens. Ideally, they would like to see the borrower/broadcaster refinance their debt with a new institution. Failing that, they want the assets sold . . . immediately. If the broadcaster refuses to cooperate (in their view), the lender might take steps to have a receiver appointed, charging the receiver to liquidate the company.
If the lender believes that the problems are temporary, they may agree to restructure the note, generally collecting fees for the restructure agreement, and usually with provisions that they will be made “whole,” perhaps getting additonal security.
Lenders often (but not always) want to avoid the bankruptcy court. At times, they can negotiate a forbearance agreement with the borrower to agree to allow a receiver to be appointed, perhaps with the broadcaster’s agreement as to who the receiver will be.
And now, a word from our sponsor. The choice of a receiver is critical. The ideal receiver has M & A transaction experience as well as station operating expertise. That is a rare combination. You can probably count on one hand the number of firms serving the broadcasting industry who have that expertise (Media Services Group is one; Larry Patrick’s company is another). Unfortunately, a number of “consultants” hang out their shingles in every downturn; check the track records before hiring workout expertise.
Those are my thoughts, what are yours?
George
Tuesday, April 14, 2009
Step up for the NAB Political Action Committee
Our industry is under attack on multiple fronts. The NAB's political action committee (NABPAC) needs your support. Click here:
http://www.nab.org/xert/NABPAC/NABPAC_Contribution_Form_2008.pdf
George
http://www.nab.org/xert/NABPAC/NABPAC_Contribution_Form_2008.pdf
George
Wednesday, April 1, 2009
The Internet Didn’t Kill Newspapers, Newspapers Killed Newspapers
Only a few short years ago, newspapers had a virtual lock on local news content, sports, lifestyle, classified advertising, and local retail display advertising. Many papers were “early” with local portals. They were also the top billing media entities in most local markets.
Fast forward to today. Many, if not most, papers are losing money. Bankruptcies are rampant. Century old dailies are being shut down. Revenues from most local papers’ Internet efforts are paltry.
Two things happened. Papers failed to control their costs (often by failing to deal effectively with their unions). And they failed to develop and implement effective Internet strategies. Remember when many tried to sell subscriptions to their Internet sites? Many failed to realize the simple truth that Internet content is free; ad supported models were the only way to go. Look what happened when most of the classified advertising migrated to Craigslist; gone, and never to return.
Newspapers had the opportunity to reinvent their sales forces and rethink their strategic direction. It didn’t happen. Are radio and TV broadcasters the next to make the same mistake?
News from the Internet Advertising Bureau points to a 10.6% growth in ‘net revenue last year. $23.4 billion in revenue placed the Internet ahead of radio and cable TV, and rapidly gaining on local TV and newspapers.
Newspapers killed newspapers; the Internet could have been the salvation instead of simply the beneficiary. SNL Kagan predicts Radio/TV revenue declines for at least the next five years in a new report. Broadcasting’s leaders need to coalesce around an industry wide strategy to begin thinking like digital businesses with big, local loudspeakers. How about adding this as an agenda item at the next NAB Board meeting?
Those are my thoughts. What are yours?
George
Fast forward to today. Many, if not most, papers are losing money. Bankruptcies are rampant. Century old dailies are being shut down. Revenues from most local papers’ Internet efforts are paltry.
Two things happened. Papers failed to control their costs (often by failing to deal effectively with their unions). And they failed to develop and implement effective Internet strategies. Remember when many tried to sell subscriptions to their Internet sites? Many failed to realize the simple truth that Internet content is free; ad supported models were the only way to go. Look what happened when most of the classified advertising migrated to Craigslist; gone, and never to return.
Newspapers had the opportunity to reinvent their sales forces and rethink their strategic direction. It didn’t happen. Are radio and TV broadcasters the next to make the same mistake?
News from the Internet Advertising Bureau points to a 10.6% growth in ‘net revenue last year. $23.4 billion in revenue placed the Internet ahead of radio and cable TV, and rapidly gaining on local TV and newspapers.
Newspapers killed newspapers; the Internet could have been the salvation instead of simply the beneficiary. SNL Kagan predicts Radio/TV revenue declines for at least the next five years in a new report. Broadcasting’s leaders need to coalesce around an industry wide strategy to begin thinking like digital businesses with big, local loudspeakers. How about adding this as an agenda item at the next NAB Board meeting?
Those are my thoughts. What are yours?
George
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