Friday, August 22, 2014

NRG Media Acquires Waterloo, IA From Woodward Communications

NRG Media, LLC  has agreed to purchase the assets of radio stations KFMW-FM, KOKZ-FM, KWLO-AM, and KXEL-AM, Waterloo, IA from Woodward Communications Inc. (subject to FCC approval).  The purchase price is $3,550,000. 

Jody McCoy of Media Services Group’s Colorado Springs office was the exclusive broker representing the seller in this transaction.

George
Media Services Group

Thursday, August 21, 2014

Will We See You At The Radio Show?

The Radio Show in Indy is just weeks away. Media Services Group will be at the Westin. Let me know if you would like to get together. #Radio


George


Sunday, April 6, 2014

Let's meet at the NAB Show

The Media Services Group suite is in the Encore tower, # 3806.  Please stop by and say hello.

George

Saturday, March 29, 2014

Radio has turned the corner

Radio revenues are reported up two months in a row in both New York and Los Angeles.  The broadcasters I am talking with are, for the most part, telling the same story.  The radio business is improving.

The overhang of workouts and bankruptcy deals has been absorbed into the market.  The depressed pricing inherent in these types of transactions has pretty much run its course.  Balance Sheets today are much healthier than those from five or six years ago.

Bottom line:  Radio has turned the corner.

While multiples are still mostly between 6x and 7x, look for fewer deals in the 5s and more pushing 8x.  The bias is now clearly to the upside.

If you would like to confidentially discuss station pricing and opportunities, the Media Services Group suite will once again be at the Encore beginning on Sunday.  Please get in touch if you would like to get together.

George
Media Services Group

Wednesday, March 5, 2014

Tuesday, January 21, 2014

JVC expands into Gainesville-Ocala, FL

JVC Media/JVC Broadcasting has expanded with JVC Media of Florida’s announcement to purchase a Gainesville/Ocala, FL cluster from Asterisk Communications. JVC has been operating the stations in an LMA since May. On January 17, JVC filed its formal application to acquire the stations for $3.5 Million.*

The stations include Hot AC WMFQ-FM, Country WTRS-FM/WYGC-FM simulcast and Rhythmic CHR WXJZ (“Party 100.9”). The $3.5 million deal includes $350K down, $500,000 in a promissory note and $2,650,000 cash at closing.

JVC will spin its CHR/Dance WBXY-FM (“Party 99.5) to RMA Media (Ricardo Arroyo) for $500K. On December 26, Party 99.5’s format was moved to JVC’s WXJZ-FM (100.9) last month. John Caracciolo and Victor Canales are the principals of JVC, and financing is provided by Northwood Ventures. The stations include two primarily serving the Ocala and three oriented to the northern Gainesville side.

Ocala
WTRS-FM Dunnellon, a Class C2 on 102.3 MHz with 50 kW @ 489’
WMFQ-FM Ocala, a Class C2 on 92.9 MHz with 50 kW @ 476’

Gainesville
WXJZ-FM Gainesville, a Class A on 100.9 MHz with 6 kW @ 299’
WBXY-FM La Crosse, a Class A on 99.5 MHz with 2.2 kW @ 472’
WYGC-FM High Springs, a Class A on 104.9 MHz with 3.2 kW @ 449’

I was pleased to represent the seller, Asterisk Communications in the transaction.  Congratulations to Fred Ingham, John Caracciolo, Paul Homer, Ricardo Arroyo, and Victor Canales on the deal.

*Pending FCC approval

George
Media Services Group

Thursday, January 9, 2014

Tower database available

Closed Circuit to tower owners:

The Inside Towers database has been released and is now shipping.

You can now lookup, plot, map sort and filter all of the tower information from the FCC’s tower registration database in one easy-to-use program.  Custom user information, including attaching local files and folders can be appended to any record.  Towers may be looked up by distance from a Zip Code, lat/long coordinates or an existing tower.  Column displays are customizable.  And the database may be updated (online) as often as you require.

Google maps and Google Earth satellite and mapping are available with a single click.  And fields may be exported for further use in another program.

The database is available for a one-time fee of $1,500; quotes for multiple licenses are available on request. Contact Inside Towers today at:  Inside Towers Database 

You can order today at:  Order Inside Towers Database





















George
Media Services Group

Wednesday, December 11, 2013

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

Monday, December 9, 2013

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

Tuesday, December 3, 2013

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.


Tuesday, October 29, 2013

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.

Tuesday, September 24, 2013

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’s10 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 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

Wednesday, September 18, 2013

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

Saturday, August 31, 2013

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

Tuesday, August 27, 2013

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

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

Friday, August 23, 2013

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

Monday, July 8, 2013

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

Monday, July 1, 2013

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

Friday, June 28, 2013

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

Thursday, June 27, 2013

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

Wednesday, June 26, 2013

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