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Station Transaction Market Picks Up

‘The attitude towards radio station acquisitions is slowly turning to the positive’

Radio business people like to watch the “station sales” indicator as a measure of the health of the industry, with the understanding that if companies are investing in buying stations, they believe in radio’s future, and/or the outlook for the economy.

Transactions have been, well, a dog in recent years, but one analyst thinks they’ve turned a corner.

“After examining the totals for 2010 radio station sales, one could become depressed,” writes Mark Fratrik of BIA/Kelsey.

“Like 2009, the total amount spent on acquisitions hovered around $400 million, even with 2010 considered to be a year of some economic recovery. However, the final tally shows there was no real increase in the value of radio station sales even though a slightly higher number of stations sold.”

He said the company’s Media Access Pro database shows the past 10 years of radio station sales. The chart shows the dollar value of the sales in black columns and the number of stations sold with a red line.

“Outside of 2006, the year Clear Channel announced its privatization, the yearly values of radio station sales hovered around the $2–5 billion range,” Fratrik says. “In 2008, we saw a noticeable drop in the value of these sales, followed by the past two years of really disastrous levels. Clearly, the economic conditions in late 2008, when the financial community was melting down, followed by the deep economic recession through 2009 slowed up the activity of radio station sales.”

He said the recent year’s “disappointing” level of station sales is due mostly to lack of available financing. Even with an improving economy, investors were worried about the future.

“In the first quarter of 2011, the tide seemed to have turned. Economic activity in general has improved, especially with the monthly employment results.”

He noted recent news of big acquisitions by Hubbard Broadcasting of 17 Bonneville stations, and by Cumulus Broadcasting of the radio operations of Citadel. The yearly total of radio station sales is at 483 stations and $3.7 billion.

“Where do station sales go from here? While it is still very difficult to secure enough debt financing for many medium- and small-market radio deals, the attitude towards radio station acquisitions is slowly turning to the positive,” he concludes.

“Some of these large deals financing still have to be worked out, but there are encouraging signs they will be. The results from this activity should be some pickup in station sales with the 2011 totals hopefully within the range seen in earlier years. And, groups that have wanted to reduce or increase their presence in the industry may soon get the chance.”