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Station Trading Drops Through the Floor

BIA: ‘An incredible decrease’

The number of radio and TV station transactions in 2008 plummeted, according to Mark Fratrik of BIA Advistory Services.

The research company says while 778 radio stations were sold in 2008 the value of those transactions only totaled $856 million. The number of stations sold was down 26.7% and the total value was down 50.7% from the previous year.

“Television stations sales also saw a tremendous decrease with the number decreasing 76% (from 232 to 54 stations) and the value of those transactions decreasing 85% (from $4.6 billion to $0.9 billion) in 2008.”

Fratrik said the declines are not surprising given the economic situation.

“The outlook for the immediate future in those advertising revenues is not expected to recover,” he wrote. “It probably will not be until the later part of 2009 that advertising revenue growth becomes positive, and even then the growth will be slow.

“With this pessimistic revenue outlook and the availability of equity and debt financing still very limited, the immediate likely future of station trading activity is one of limited sales. Sellers who want to exit the industry, in part or totally, see the limited number of buyers and will wait till conditions improve.”

Fratrik thinks the only action that may occur is “through the disposition of assets that are part of bankruptcy proceedings. Even then, the owners of these assets will try to hold out for as long as possible, hoping for greater demand for these properties.”

He advises owners and potential sellers of stations to look beyond the current economic and credit conditions and “try to build value for their properties in this new media environment (which continues to evolve no matter the economy). They should be training their advertising sales staffs to sell their stations as a multi-platform delivery device (broadcast, online, mobile, search engine maximization, promotions/events) and owners should be investing in new equipment by spending the resources necessary to develop new revenue sources, including the enhancement of the station’s website and mobile advertising platforms.”

By the time we get past the downturn, he concluded, “those investments will make the broadcast stations more competitive in local media markets, thereby increasing their revenues and ultimately their values.”