Big FCC news out of the 3rd Circuit on media cross-ownership

A U.S. appeals court vacated an FCC rule relaxing limits on cross-ownership. The ruling marks the second time the appeals court has intervened in the commission’s attempts to relax media ownership rules.

Here's the story from Bloomberg: CLICK HERE

Have a great weekend,

George
Media Services Group

Randy gets the old band together in Chi-town

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

George
Media Services Group

Paul Stone named "Broadcaster of the Year" by GAB

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

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

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

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

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

George
Media Services Group

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

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

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

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

George
Media Services Group

Another day, another deal: more evidence of a pickup

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

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

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

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

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

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

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

George
Media Services Group

Katz: The Radio Primer

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

George
Media Services Group

Deal market coming to life: 2 closings

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

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

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

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

George
Media Services Group

Article from "The Deal Magazine"

This is a well written story from "The Deal Magazine" about the "C" radio companies and what the future might hold for them. Click: HERE

George
Media Services Group

Erwin Krasnow: The First Amendment and the Fallacy of the Public's Airwaves

Erwin G. Krasnow recently penned a piece entitled The First Amendment and the Fallacy of the Public's Airwaves. It is worth reading. It also stirred up some great feedback, both pro and con:

Kudos

Frank Kalil, Kalil & Co – “Every owner of TV and Radio should send $1000 to the Erwin Krasnow Thank You Fund.”

Mark Fowler, former FCC Chairman – “It’s heartening to see your solid advocacy in defense of our beloved First Amendment.”

Ken Robinson, former Chief of Staff to FCC Chairman Al Sikes – “You don’t seriously think any of our Commissioners have (a) heard of Sen. Dill, (b) thought what the statute might say, or (c) let the First Amendment insinuate itself into their logic. Aw, c’mon!” “Always remember what a former FCC Chairman said of some of his colleagues - - “what they don’t know would fill the Anaheim Coliseum.”

Nortex – “Good advocacy by a former lawyer of the National Association of Broadcasters. If adopted, it would eliminate archaic regulations enforced by the FCC. The ‘public ownership’ of the airwaves has been used through the years to justify control of content.”

Musichead1029 – “This eminently rational mission statement is unlikely to be considered, as it would require the government to take actions that would threaten its power base. The FCC is interested in control, not ‘public interest.’ The only time you hear about the ‘public interest’ in the context of government is when a possibly well-meaning but ultimately condescending politician like Newton Minnow or Michael Copps claims to know what the ‘public interest’ is, and how they can implement it if they are just given the power to do so.”

Brick Bats

Marcus Aurelius – “Just sounds like another corporate backed jerk who wants to take all rights away from citizens and have everything controlled by corporations.”

Onthesidelines – “Typical libertarian drivel.”

Len Hart – “KRASNOW’S reasoning is fallacious, a right-wing inspired rationalization, an ex post facto excuse to let huge corporations reap huge profits by lying to us, brainwashing us, and otherwise kissing up to the right wing of which they are a part!”

Bird – “Using his “logic” then no one can own any land because that has been here long before man as well, but then that wouldn’t fit into his randist, capitalist wet dream. What a shithead.”

Josh – “This is absurd.”

Jackass – “Spoken like a true Conservative rat Republican. Smaller government, more control for government taking citizens rights away."


Erwin is a partner in the law firm of Garvey Schubert Barer in Washington, DC, and is a former general counsel of the National Association of Broadcasters and the co-author of The Politics of Braodcasting Regulation.

George
Media Services Group

David Oxenford: Getting Ready for License Renewal

A four year cycle of radio and television station license renewals begins on June 1 for Maryland, Virginia, West Virginia, and DC. David Oxenford posted a good article with links to slides and other useful resources. Click HERE.

George
Media Services Group

More Digital Updates from the 3rd Annual Future of Radio Conference in Hilton Head, SC

Jim Hooker issued a release from his Future of Radio Online Conference with links to several interesting videos. Here is his post:

Today we posted three video presentations from our 3rd annual Future of Radio Conference. For the last two years we have devoted part of our time to having operators talk about the digital efforts they are making in their local markets. This year Tom Davis from Davis Media in Williamsburg/Yorktown, VA, J Chapman from Maverick Media in Rockford, IL and Jim Brewer Sr. from Brewer Media in Chattanooga, TN, told us about their unique digital efforts.

Tom Davis talked about the way they have integrated their digital newspaper with their radio stations. He described the effort this way: “We believe the winners will transform from broadcasters to local media companies, driving visitors to digital platforms using the power of radio and generating more revenues on both as a result. The process is called Local Convergence. The model is called the Hometown Driver, and it works with any well-targeted digital platform. The result is more time spent connected rather than just TSL.”

J Chapman explained how they fulfill their mission of being “our customer’s best marketing partner.” He talked about the digital opportunity as Maverick Media sees it, and detailed the technology they are using to serve their customer. He said that while they are doing 8% of their revenue in pure digital, not exchanged for radio dollars, they expect it to grow significantly in the future. The key is to keep focused on the customer’s needs to take advantage of the digital opportunities in their market.

Jim Brewer Sr. discussed how they have created many “dot coms” to exploit opportunities in Chattanooga. He outlined the full array of digital offerings focused on needs in the community. ChattanoogaHasCars.com, and ChattanoogaHasFun.com are just two examples. Jim was quite candid about both the successes and the challenges they have faced with all of their varied digital assets.

You will find each presentation packed with street level evidence of success in broadening the radio business into the multi platform world of digital.

Go to Future of Radio Online then click on the name of the presenter to access their video. After you have viewed these presentations, please give us feedback on their usefulness.

George
Media Services Group

Atlantic City bankruptcy sale marks improved trading marketplace

As you may have seen reported in the trade press this morning, we just concluded the chapter 11 bankruptcy sale of Atlantic Broadcasting’s five radio stations in Atlantic City, NJ. This was a fascinating transaction from the standpoint of the speed to completion as well as the results. And I think that it speaks to the increasing health (and improving pricing) of the station trading marketplace.

After our engagement was approved by the bankruptcy court in mid-January, we opened our online data room in early February with instructions from our client to move the transaction along swiftly. Since this was a bankruptcy sale, it was publicily known (and widely followed in the trades). Over the ensuing weeks, we generated a lot of interest in the properties; ultimately we had around 40 signed non-disclosure agreements. Each of those parties received access to the data room.

A “stalking horse” buyer was selected by our client with a proposed purchase price of $3 million. If no competing bids had been received, the stalking horse would have purchased the properties for that amount. If they were over-bid (as happened), they proposed to receive a break-up fee (which the judge approved yesterday). Ultimately, our client qualified five bidders to participate in an auction. The auction took place on Wednesday.

Bidding at the auction was robust, and in the end, a local group prevailed (Longport Media, headed by attorney George Miller). The ultimate price was $4.2 million. Yesterday, the sale was approved by the bankruptcy court in Camden, NJ.

Bottom line: we were able to complete the sale from start to finish in roughly 90 days. Pricing was in line with our predictions and everyone involved in the process was pleased. The stations will go to new local ownership and should prosper. I do not think that these results could have been achieved a year ago; things have definitely improved in the marketplace.

The sale is subject to FCC approval. Congratulations to my partner Tom McKinley for a job well done.

George
Media Services Group

LinkedIn groups for broadcasters

If you're involved with the broadcasting industry and using LinkedIn (and if not, why aren't you??!!), here are some groups you might want to consider joining.

The first, Radio/TV Station Buyers, is a group for station owners and prospective buyers (and in full disclosure, I am the Admin). We have almost 600 members, including a lot of well known broadcasters. Our discussions are timely and relevant. Please consider joining us and participating regularly. It is a good resource for those of us in the business of buying, selling, and building value with radio and television stations.

The second, Future of Radio Online, is run by Jim Hooker and is an offshoot from an annual conference which Jim hosts on Hilton Head Island. This will be a great resource for contemplating radio's future. I recommend it highly.

George
Media Services Group

Stephan Sloan: "There are now more streams than listeners online."

For the last three years, Jim Hooker has invited a group of broadcasters, brokers, researchers and consultants to Hilton Head Island for a discussion on the future of radio. I am pleased to have worked with Jim in putting together the group. Each year has yielded a lot of forward thinking about the radio industry.

One of my partners at Media Services Group, Stephan Sloan, has been a participant in the meetings, and this year made a presentation about streaming. He told the group that in 2007, half of all Internet listening was being done to 81 of 10,000 streams. In 2011, the data shows that half of all listening will be done to 161 streams, but there are now more streams than there are people listening to the Internet.

Stephan also addressed the relationship of retail sales to radio revenue, which he’s been tracking since 1980. In 2000, at the peak of the business, radio was doing over .6% of retail sales in revenue. In 2010 it was only .34%, and the forecast is almost flat going out to 2013.

For additional information about the conference and Stephan's remarks, click PRESS RELEASE. For a look at Stephan's presentation on video, click VIDEO.

George
Media Services Group

Hawaii: 2 FMs/1 AM for sale

My partner, Greg Merrill, is handling a court ordered sale (Chapter 7) for stations serving Hilo/Kona (Big Island), Hawaii. Offers are due June 1, 2011.

If you're interested, contact Greg at 435-753-8090 or Merrill.Greg@Comcast.net

United States Bankruptcy Court
District of Idaho
10-40017-JDP

George
Media Services Group

Report from the NAB Show in Las Vegas

Now that a week and a half have passed since returning from the NAB Show in Las Vegas (and I have caught up returning my phone calls and answering email), I would like to share some thoughts on this year’s convention.

We were back at the Encore for the second year (after a long run at the Bellagio). Attendance for the show was reported up over last year; the traffic in our suite would tend to bear that out. All of our guys were busy with meetings on Monday and Tuesday; some stayed over for meetings on Wednesday as well.

The “tone” was noticeably improved over the last couple of years. We all continue to lament the absence of senior debt, but there is are active crowds of both buyers and sellers. And in spite of the lack of bank financing, some deals are actually getting done (also a marked improvement over prior years).

Station operations are generally continuing their upward trend in performance. Most operators had a pretty good year last year and expect even better results in 2011. As you might expect, there was a lot of chatter about the Citadel/Cumulus and the Bonneville/Hubbard deals. Most believe that the valuation of these two deals sets the high water mark for BCF multiples. We agree. Our company opinion is that those deals traded in roughly the 8.0x to 8.5x range (or at least will be there by the closing dates). Buyers are offering 6’s and sellers are asking 8’s for the less prime inventory. The deals which are getting done appear to be in the 7’s.

Tower sales continue to be of interest. The tower trading marketplace is robust with well-financed and aggressive buyers. Tower cash flow multiples are 8x to 10x for broadcast and high teens and up for wireless.

While most of my time was spent in our suite in meetings, I did make it to Erwin Krasnow’s annual FCC Breakfast at the Las Vegas Country Club. It was well attended and a good show, as always.

Next stop, the Radio Show in Chicago in the Fall.

George
Media Services Group

Sale of WVMP-FM closes

Congratulations to Edward B. Walker of CityWorks Community Broadcasting in Roanoke (buyer) and Allen Shaw of Centennial Broadcasting (seller) on the completion of their deal for WVMP-FM in Roanoke (licensed to Vinton, VA). The sale price was $500,000.

WVMP programs a AAA format at 101.5 mHz. BIA reports a 60 dBu pop count of 245,854. The price works out to $2.03 per pop. I am pleased to have represented Centennial in the transaction.

George
Media Services Group

Clear Channel names replacement(s) for Mark Mays

The long awaited announcement from Clear Channel has arrived. Mark Mays has officially been replaced by Thomas Casey and Robert Walls. They will fill a new position called "Office of the Chief Executive Officer." Casey has been Executive Vice President and Chief Financial Officer; Walls, Executive Vice President, General Counsel, and Secretary of the Company. They will both keep their current responsibilities.

Read the Radio-Info.com article HERE.

George
Media Services Group

2 FMs sold in Alexandria, LA

As reported today in the "trades," Kevin Wagner's URBan Radio (d/b/a Trinity Broadcasting and FM Broadcasting) has sold its two FM stations in the Alexandria, LA market. “B102 Jamz” KBCE programs urban and is a Class C3 licensed to Boyce. Urban AC “Mix 93” KMXH is an A licensed to Alexandria. The buyer of both stations is JWBP Broadcasting, which is 65% Jerry Williams and 35% a family group known as Beaird Properties.

I represented the seller and Jerry Proctor represented the buyer. Congratulations to all parties involved!

George
Media Services Group

Setting up appointments for the NAB Show

The NAB Show in Las Vegas is just around the corner. Media Services Group rolls into town on Saturday, April 9, and will hold court through Wednesday morning (April 13).

Our suite will once again be at the Encore. If you are interested in having a confidential discussion about station values and the trading marketplace, please get in touch. Click to email.

George
Media Services Group

New White Paper: "Buying Your First Radio Station"

Media Services Group has released a White Paper on "Buying Your First Radio Station." This covers the basics.

Click HERE to download (email registration required).

George
Media Services Group

New York Times article: Static on the Citadel Radio Dial

The New York Times published a piece over the weekend on the Citadel/Cumulus deal:

"EXECUTIVES who run public companies, and the directors who oversee them, are supposed to operate with the shareholders’ best interests at heart. If a capitalist society like ours is to function, that has to be a bedrock principle."

Check it out HERE.

George
Media Services Group

Media Services Group engaged to sell Atlantic City stations

Press Release from January 20, 2011

Atlantic Broadcasting of Linwood NJ Limited Liability Company announced today that Media Services Group has been retained by the company to sell its five radio stations and related assets in the Atlantic City, NJ market. The selection of Media Services Group has been approved by the United States Bankruptcy Court, District of New Jersey.

Atlantic Broadcasting voluntary filed for Chapter 11 bankruptcy on December 20, 2010 seeking to reorganize through the sale of its broadcast assets.. The radio stations involved in the sale include:

WTKU-FM 98.3 Kool 98.3 Classic Hits
WMGM-FM 103.7 The Shark 103.7 Classic Rock
WBSS-AM 1490 La Fiesta Spanish
WOND-AM 1400 News/Talk 1400 News/Talk
WWAC-FM 102.7 Wild 102.7 Top 40

In addition, the company owns three parcels of real estate, including two tower sites and an 11,670 square foot building located in Linwood, NJ.

Media Services Group’s Tom McKinley in the metro New York office and George Reed in the firm’s Florida office will handle the brokerage duties. The stations are being put on the market immediately. An online due diligence data room has already been organized and is available to qualified prospective buyers. Interested parties should contact Media Services Group.

For More Information:

R. Thomas McKinley, Director
Media Services Group, Inc.
973-631-6612 Office
415-710-5350 Cell
RTMcK2515@aol.com

George R. Reed
Media Services Group, Inc.
904- 285-3239 Office
904- 631-7093 Cell
George@MediaServicesGroup.com

About Media Services Group

Media Services Group is a leading national media brokerage firm specializing in radio/TV stations, their digital assets, and communications towers. The firm matches broadcast station and tower buyers and sellers with a middle market focus. The company’s valuation practice is among the top in the industry.

Media Services Group also assists broadcast lenders with troubled loans, including providing receivership and trustee services. We have served the industry, its investors and lenders for over 20 years.


George
Media Services Group

From David Oxenford's blog: Start Planning Broadcast Transactions Around The License Renewal Processing Periods

David Oxenford penned a good article on considering the processing time for license renewal applications in connection with station sales. This becomes an issue every time the renewal process begins. If you're thinking about selling or buying a station, check it out: HERE

Thanks to Bob Heymann for bringing it to my attention!

George
Media Services Group

Chart of U. S. Frequency Allocations

I found this interesting. It is a color coded chart of all U. S. frequency allocations from the Department of Commerce. Click HERE to check it out.

George
Media Services Group