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Connoisseur Media acquires Bonneville’s San Francisco Cluster

MarkW said:
$10 million for THE WHOLE CLUSTER.
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I agree; the amount is shocking. When Entercom swapped its stations in Cincinnati and a handful in Seattle to Bonneville for KOIT as well as 95.7 and 102.1, each of those three stations would've been worth more than $10 million.

When Entercom acquired the CBS stations in Austin, Cincinnati, Memphis, and Rochester, it paid $262 million. No one not in the room at one of the two companies knows what the agreed upon price per station was, but, assuming an equal value of all the stations, it would've amounted to a little over $17 million per station. Entercom then swapped five FM's (four in Cincinnati, one in Seattle) and two AM's in Seattle for the three Bonneville stations in San Francisco. That would seem to be an estimated value of the three Bonneville FM's of around $100 million.
 
TheBigA said:
The story doesn't talk about real estate. Who owns tower properties?

Comps: KEXP paid $3.7 million for KREV, which isn't a full market signal.
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There is no real estate involved. KOIT is on the Sutro tower owned by the big four TV stations in the market, KMVQ and KBLX are on American Tower sites. KUFX was on the tower owned by 95.3 KRTY, not sure who owns it now.
 
Kent said:
I agree; the amount is shocking. When Entercom swapped its stations in Cincinnati and a handful in Seattle to Bonneville for KOIT as well as 95.7 and 102.1, each of those three stations would've been worth more than $10 million.

When Entercom acquired the CBS stations in Austin, Cincinnati, Memphis, and Rochester, it paid $262 million. No one not in the room at one of the two companies knows what the agreed upon price per station was, but, assuming an equal value of all the stations, it would've amounted to a little over $17 million per station. Entercom then swapped five FM's (four in Cincinnati, one in Seattle) and two AM's in Seattle for the three Bonneville stations in San Francisco. That would seem to be an estimated value of the three Bonneville FM's of around $100 million.
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Station valuations are plummeting and fast.

K-Love bought the two Milwaukee Radio Alliance stations for $4 million.

In the case of Bonneville San Francisco, you have expensive studio rent (to the point the sublet part of their facility to Cumulus), tower rents for the four stations and a number of boosters, and declining ad revenue. The 2024 revenue projections were included in the filing and show the four stations billing $19.2 million last year.
 
This is the big part of the story:

Connoisseur is seeking a waiver of the Local Radio Ownership Rule to own nine FMs in the San Francisco market.
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No spin-offs. They want to retain the full cluster. Current ownership rules say:

In a radio market with 45 or more stations, an entity may own up to eight radio stations, no more than five of which may be in the same service (AM or FM).
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They're asking to keep 9 stations in a market that only allows 5. If they get the waiver, that would be quite a signal to the industry.
 
TheBigA said:
That was 20 years ago. Close to top of the market value.
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Fair. No one expects 10-15x multiples anymore. Still, when Bonneville acquired those four stations after the CBS/Entercom merger, those stations fetched $15-20 million apiece. This would seem to be a 75% reduction in value from less than ten years ago.

lanceventa said:
Station valuations are plummeting and fast.
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No doubt! We can obviously see why Cox and Beasley took $20 million for properties in Tulsa and Ft. Myers.

lanceventa said:
In the case of Bonneville San Francisco, you have expensive studio rent (to the point the sublet part of their facility to Cumulus), tower rents for the four stations and a number of boosters, and declining ad revenue. The 2024 revenue projections were included in the filing and show the four stations billing $19.2 million last year.
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At the rate this is going, Warshaw is going to have traded a few stations in Bakersfield and around 20 in unrated markets in Missouri for a San Francisco cluster! No doubt he's a good dealmaker, and this deal also undoubtedly carries risk due to the high costs of operating in the Bay Area. Still, Warshaw would seem to have outdone himself on this one.
 
That combined billing number is depressingly weak considering two stalwarts (KOIT and to a lesser degree, KMVQ) are among the stations considered.

Still, I'm very surprised the cluster sold for anything less than $25 million.

The precarious state of commercial radio in the year 2025 may be even worse than I imagined.

Lance or anyone else - do you happen to recall the sale price for 100.7 in San Diego (a significantly smaller market than San Francisco) ?
 
MarkW said:
That combined billing number is depressingly weak considering two stalwarts
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I think it reflects something I've been talking about for a while, and that is the low level of PUM in the market compared to its population. I have no actual statistics to prove it. Just a feeling I have had for the past 5-10 years, based on what I see stations doing. The Cumulus cluster for example. The fact that they can't even support their own studio location said a lot to me.

To me, the cause is the higher use of non-broadcast devices in this market, perhaps because of geography or the sophistication of the population.

MarkW said:
The precarious state of commercial radio in the year 2025 may be even worse than I imagined.
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It's a reality that is manifested in the actions the owners have been taking in terms of staffing and formats. Because listeners themselves don't pay for the service, and don't see the specifics about market revenues, they aren't reminded about what's been happening. But those of us who work in the business can see the quality of advertising drop, the demand for advertising in certain dayparts, and the resulting changes in staffing.

Meanwhile, the FCC keeps talking about broadcasting using "scarce public frequencies," as though scarcity creates value. What we're seeing is that it doesn't. The demand for these frequencies simply isn't what it used to be, and demand is what sets market values.
 
TheBigA said:
To me, the cause is the higher use of non-broadcast devices in this market, perhaps because of geography or the sophistication of the population.


But those of us who work in the business can see the quality of advertising drop, the demand for advertising in certain dayparts, and the resulting changes in staffing.
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Great points.

1. I would argue that the Bay Area population is more sophisticated than in Los Angeles based on living in both places for a large chunks of my life. I lived 25 years in the Bay Area and 20 years in Los Angeles and then about 16 in Sacramento in the middle..

2. Just listening to the advertising in LA, a great number of ads are for ambulance chasers, debt reduction companies, furniture on credit, how to get out of your timeshare and tax attorneys. Of course, it seems OReilly Auto Parts still believes in terrestrial radio.
 
MarkW said:
Still, I'm very surprised the cluster sold for anything less than $25 million.

The precarious state of commercial radio in the year 2025 may be even worse than I imagined.
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By way of comparison, Bonneville paid $141 million for the Sacramento and San Francisco clusters spun off by Entercom (now Audacy) after Entercom's purchase of CBS Radio. (Source linked below.) That combination makes it hard to compare the purchase price in 2017 with the sales price in 2025. But I think it's reasonable to assume that the San Francisco cluster would have been at least a majority of the value of the purchase. Let's ballpark it at two-thirds. That would yield a purchase price of $94 million eight years ago. That's a nearly 90% drop in value in nominal dollars over eight years. If one accounts for inflation, the loss of value is even worse.

Even if you assume a 50-50 split, that yields an 86% drop.

This can't help but have an impact on other stations' valuations.

Source: Bonneville Turns San Francisco and Sacramento LMAs Into Purchase
 
Mark Roberts said:
That combination makes it hard to compare the purchase price in 2017 with the sales price in 2025.
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That's why I brought up the used car analogy earlier. Yes the property lost value. But the owner had the use of that property for that time. They had 8 years of revenue, and a percentage of that as profit. Still it will likely be written off as a loss when the taxes are done.

That's why earlier in this thread I surmised Bonneville won't be buying any more radio stations moving forward.
 
TheBigA said:
Meanwhile, the FCC keeps talking about broadcasting using "scarce public frequencies," as though scarcity creates value. What we're seeing is that it doesn't. The demand for these frequencies simply isn't what it used to be, and demand is what sets market values.
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The FCC is correct in that there are a limited number of frequencies available. On the other side, your comment about scarcity not creating demand is also true--although we seem to be learning about this aspect just now. Both of these statements race to the same question: Are we as a country going to be better off if we allow the same few companies to monopolize those frequencies that are available or if we keep the same monopoly rules in place and allow radio broadcasting to ultimately fail, if that is where this is headed. If this is the choice we now face, then I would vote for the latter alternative. Why? Because (as @davideduardo has theorized given his Latin American background and experience), if all radio frequencies become only the home of national networks owned by either one or a small handful of companies, then if things turn around, there would be absolutely no room for newer and smaller players to enter the fray.
 
The problem is that "small players" do not have the scale necessary to survive.

There is no "scarcity" in the sense that there is a growing number of outlets through which to advertise. That ultimately results in less revenue for radio. Having more owners is not going to solve that problem.
 
ted chittenden said:
Are we as a country going to be better off if we allow the same few companies to monopolize those frequencies that are available or if we keep the same monopoly rules in place and allow radio broadcasting to ultimately fail, if that is where this is headed.
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When you look at it from the point of view of "we as a country," that only matters if the government pays for operations. If we continue with broadcasting as a "public-private partnership," then one has to consider the needs of the operators. Otherwise, we end up with a bunch of religious stations that aren't in the mainstream media business.

Are we as a country better off with basically three cellular providers? They're also regulated by the same FCC. Nobody is calling any of them monopolies.

As long as there is some form of competition, there is no monopoly. In its latest ruling about FCC ownership rules, the courts accepted the view that broadcasting competes with other forms of media. The government may not be there yet. But those if us who work in the industry don't see ourselves as having a monopoly.
 
TheBigA said:
When you look at it from the point of view of "we as a country," that only matters if the government pays for operations. If we continue with broadcasting as a "public-private partnership," then one has to consider the needs of the operators. Otherwise, we end up with a bunch of religious stations that aren't in the mainstream media business.

Are we as a country better off with basically three cellular providers? They're also regulated by the same FCC. Nobody is calling any of them monopolies.

As long as there is some form of competition, there is no monopoly. In its latest ruling about FCC ownership rules, the courts accepted the view that broadcasting competes with other forms of media. The government may not be there yet. But those if us who work in the industry don't see ourselves as having a monopoly.
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Cellular is not broadcast radio, and radio is not cellular.

Radio stations, as capital intensive as they can be, are a tiny fraction of the $Billions and $Billions that it's taken (and continues to take) to design, architect, build, operate and maintain a nationwide cellular system with international interconnects. There are tens (maybe hundreds) of millions of customers and terminals (i.e., cell phones) operating concurrently. The two paradigms are in different galaxies and really shouldn't be compared.

The only place the two models really overlap is in the public safety aspect. A community without phone service in an emergency is an isolated island. Somewhat similar with radio, although you can receive a distant transmission with a decent radio if one is able to send their signal in the direction of your location. Cellular signals are inherently local, transceiving in milliwatts, and without the presence of working cell sites within the signal radius of customers then everyone is screwed.
 


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