CBS bought 101.9 for $75 million in 2012.
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CBS bought 101.9 for $75 million in 2012.
I was thinking about the 3 way swap between NY Times, NY Public Radio & univision. 96.3 and 105.9 swapped for 33.5 m then another 11.5 M was paid for the B1 at 105.9. It amounted to 45 M being paid fir a class B at 96.3. But I was off on the timing. It was 2009, 6 years ago.
That was a special situation where the format had to be guaranteed a new home, and was a complicated three way deal including an inferior facility at 105.9. It was also in the deepest moment of the recession.
More appropriate a yardstick is the 2014 sale of WBLS and the AM for $131 million; the AM is likely worth less than $10 million so there you have a $120 million price, but for a station with considerable cash flow.
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And that was a distress sale. Merlin paid over $175 million for the facility 18 months prior.
Station sales are not "mortgage" financed. If financed, they are done with business loans, the basis for which can include the buyer's other assets, the stick value of the license and event he buyer's success with other stations in similar situations. In today's environment there are very few single station operators buying in major markets, so often any purchase is made with an existing credit facility or based on commitments already in place; it's not like a house where you sign the papers and then ask a lender for a loan to cover.
Call it what you will, loan, credit facility, line of credit, all different names for same thing, borrowed money that has to be paid back. And with no income, you have to have the cash (unlikely). And with no income, borrowing money becomes risky and lenders want a high interest rate - makes it hard to make a profit. At 131 M, what multiple of cash flow did Emmy's pay for WBLS?
Th most famous stand alone operator in a top 10 market being Jerry Lee of WBEB 101.1 I. Philadelphia. what is the latest BIA Kelsey revenue estimate for WLTW New York? A post above had them at 70 Mil in 2005 or there abouts. 2014 was in the 40 mil range. What is the estimate for 2015 David?
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K.M. Richards
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In fact, you'd have a much better chance with the Pacifica National Board, based at the Berkeley station. That is, is you could even get them to agree to listen. They have trouble getting a majority vote on anything.
BIA revenue listings are historic, not predictive. They will issue the 2015 numbers in about April of 2016.
Jerry Lee bought his station along with a partner about 55 years ago. Similarly, Sol Levine bought his LA FM in the same period of time. But single owners are not buying major market FMs these days.
One added issue is that banks don't like the added risk of a single market operation... they want to have the risks of a local economic turndown padded by ownership in multiple markets. A few years back, I looked at buying a small cluster in one market, and could not get financing; I was able to get it for a 7 market deal but that involved more work and travel than I was willing to take on so I let it all slide.
If you are trying to make a point about WLTW's drop in revenue, the cause is market fragmentation of listening and the compacting of numbers at the top. In New York there are 6 stations at the top in 25-54 with a 0.4 rating, and 5 with a 0.3. That covers WBLS at the top to WKTU in 11th postion.
And that is why major facility single-station stand-alone deals don't get financed in competitive markets.
Emmis likely paid over 10 x cash flow due to the opportunity to own NY's remaining adult Urban station once they put WRKS in an LMA with ESPN. They paid a premium for the potential. And, of course, WBLS just scored a #1 in 25-54 in the November book.
10x cash flow is a high multiple. That says you are paying 10x 1 year's cash flow before subtracting loan payments. That sounds chancy. If Emmis paid 10x and revenue is declining 5%/year, the net income may be declining faster than 5%/yr, say 5-10% /year. That's bad because even if you can make the loan payments, you might trip a loan covenant with the lender and they could find you in default and call the loan or take over your station. Then you'd be up the creek.
But revenue in NY is not declining. It may be realigning, but there is a very tiny but positive growth.
In the case of Emmis' purchase, the situation was predictable. Emmis leased one of the two adult Urban stations to ESPN, then bought the remaining one. The consolidation of listening brought not only about a 2-share increase in 25-54, it jumped WBLS way up in market rank guaranteeing not only a must-buy status but a higher rate.
Certainly there was a certain degree of risk, but the upside was significant.
For a number of years, I bought failing stations for what was an infinite multiple as they were not profitable. Each one was rebuilt and reprogrammed into profitability. In the end, I did not pay for someone else's cash flow with the associated downside risk of revenue loss. So what Emmis did was safer than buying and reformatting a stick, and worth the extra multiple. It even had added value as, combined with WQHT, it gives them a broad coverage of the New York African American and ethnic communities.
David, I didn't realize all the interplay with Emmis's purchase and it still hasn't fully sunk in but I get your drift. The sale prices still seem too big for a no growth business. CBS purchase of 101.9 must be an exception because in Phila CBS opted to trade stations with Beasley to pick up 2 Phila FMs instead of lay out the cash. Thanks for the info.
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K.M. Richards
Guest
Ummm, I was being sarcastic ...
If anything, Pacifica's national board of directors is even more dysfunctional than WBAI's management.
You seem to be looking only for advice that fits into your idea. I think it should be obvious by now that such advice isn't going to come from us, since we understand this business called radio all too well ... and we have watched Pacifica's poor excuse for broadcast management for decades now.
I think a quote from National Lampoon's Deteriorata is in order:
With all its hopes, dreams, promises, and urban renewal, the world continues to deteriorate.
GIVE UP.
CBS did the Beasley trade as they wanted out of a couple of markets and into a couple that Beasley had because of two factors: they wanted to build radio in markets where they had TV and a new media portal and they wanted a deal with a tax-efficient like-kind trade.
Ok I didn't pick up on the sarcasm. I do appreciate the replies from everyone.
They were lampooning(Imagine that!)a new reading of a very old poem called "The Desiderata". This is the Les Crane version that I remember: https://www.youtube.com/watch?v=2yNJaKF9sXA
David, the 15 Nov ppm ratings I saw rated WKTU 3.9 in 8th place. #1 was WLTW at 6.8. It wasn't broken down by age demographic.
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