Cox Spins Off Tulsa Cluster

[gr8oldies]

Hopefully he wasn't advised by Rob U. Blind.....

I won't say it.....I won't say it........

 

[Mark Roberts]

I suspect it's going to be a cash deal as Cox sold its tower assets roughly 10 years ago. I don't think Zoellner does private equity deals, and getting a bank loan for stations that have no real property assets is somewhere between difficult and impossible.

I would think that a purchase that involved financing would require appraisal of the value of the assets being acquired. Appraisals can be tricky, and aren't always the firmest determinant of value, but if an asset doesn't appraise for its purchase price, the lender isn't likely to proceed with financing it. All this is a roundabout way of saying I think your suspicion is on-target, that it's likely to be a cash deal. On the other hand, if a buyer is paying cash, shouldn't they get a discount?

I find it rather strange.

 

[radiofan2023]

I won't say it.....I won't say it........

 

[davideduardo]

I'm shocked by the price. Yes those stations bill well, but no other recent deals hold that valuation. It will be interesting to see if Cox is able to find buyers for its other markets based on the amounts they received for Houston and Tulsa.

First question about that absurdly high price: is there a big amount of land involved, maybe for the directional low-frequency AM? Perhaps there is land deal that covers a rebuild and leaves a huge sum from the property?

Or the land has oil under it... or...

 

[davideduardo]

I would think that a purchase that involved financing would require appraisal of the value of the assets being acquired.

Except, in some cases, for transmitter land, almost all the value of a station is in the limited exclusivity of the license. Because a station does not "own" the license, we see that entities like the Small Business Administration won't loan for stations.

If you looked in the past at a small market AM you might see a 1kw operation with a small building of its own. Equipment: less than $30 thousand. Building (not today...in the past) perhaps $35 k to $50 kw. In 1980, such a station might have sold for $800,000 to $1.4 million (again, I am generalizing). So the loan had $75 thousand in collateral and the rest, maybe a million or more... was intangible. What bank or S&L would take that on?

Appraisals can be tricky, and aren't always the firmest determinant of value, but if an asset doesn't appraise for its purchase price, the lender isn't likely to proceed with financing it. All this is a roundabout way of saying I think your suspicion is on-target, that it's likely to be a cash deal. On the other hand, if a buyer is paying cash, shouldn't they get a discount?

Big groups can get financing, often from secondary markets and at as much as Prime plus 6 or so. A startup with no experience in ownership won't get it.

And all a lender needs to see is the Soros-financed purchase of a bunch of Univision stations: a poster child for "not even a dollar!"

 

[Kent]

First question about that absurdly high price: is there a big amount of land involved, maybe for the directional low-frequency AM? Perhaps there is land deal that covers a rebuild and leaves a huge sum from the property?

Cox sold its towers several years before it sold to Apollo Global Management. With the possible exception of the studio at 27th and Memorial, those stations have no real assets.

I suppose Zoellner could’ve used some of his other buildings as collateral for the station loan. He’s involved in more than just optometry, though that's his bread and butter. He's successful in almost everything he's done to date. One of my friends joked that he bought so many radio ads maybe he thought buying the stations was cheaper. For $20 million, that's probably not the case!

 

[davideduardo]

Cox sold its towers several years before it sold to Apollo Global Management. With the possible exception of the studio at 27th and Memorial, those stations have no real assets.

Are you sure they sold the AM site? Many AM sites, with emphasis on directional ones, are not particularly useful for vertical real estate companies.

 

[Delete My Account]

Not accusing Zoellner of anything directly but the happenings related to his dispensaries suggest not all is ethical or above board in his wider family orbit. Hopefully the radio stations stay in the hands of radio professionals, and aren't used for any agendas or nepotism. Times like these, I really miss John Erling.

 

[Kent]

Are you sure they sold the AM site? Many AM sites, with emphasis on directional ones, are not particularly useful for vertical real estate companies.

My understanding is that they did. The last time I set foot is what's now Cox Tulsa, it was in 1993, and only KRMG and KWEN were there. That was a full three years before Cox bought New City. The studios were at 71st and Yale at the time, and the last time I was in 2727 S. Memorial, it was a Drug Warehouse. It was also a Burlington Coat Factory before Clear Channel bought it to consolidate its radio and TV holdings, but I never set foot in there.

In other words, my information might be a tad dated. I can’t tell you what might be there now, but, if you go back to the early 90’s, 102.3, then KTOW-FM, was on one of the KRMG towers. I can’t remember which one, but I remember it was on one of them. I don’t remember if anyone else was on one of those towers, but I remember 102.3 was definitely on one. I believe it was there until it upgraded to 50,000 watts in 1998. Seems like it had to move further west when it upgraded, but I'm not 100% certain.

 

[inari]

KRMG's AM site is owned by "IWG Towers Assets II LLC". County records says it was sold in 2015 for $104,000.

County record: Tulsa County Assessor - 5801 S 265 AV W SAND SPRINGS 74063

A quick search of the APA brings this up:

Real Property. Schedule 1.1(c) contains a description of all real property used or held for use primarily in the Business none of which is owned. Schedule 1.1(c) includes a description of any lease, license or similar agreement under which Seller is lessee or licensee of, or holds, uses, or operates, any real property in the Business (the “Real Property Leases”)

Seems to point to no real estate included and everything leased.

 

[Gary Thompson]

If your son still works at the taproom, bring some beer cans for the adults. That'll make you some real money!

(Also, pass along some good words from Kara and me. We hope he’s been well!)

He said He saw you in there! Hope you're well. Let's get a drink soon!