-
Get involved.
We want your input!
Apply for Membership and join the conversations about everything related to broadcasting.
After we receive your registration, a moderator will review it. After your registration is approved, you will be permitted to post.
If you use a disposable or false email address, your registration will be rejected.
After your membership is approved, please take a minute to tell us a little bit about yourself.
https://www.radiodiscussions.com/forums/introduce-yourself.1088/
Thanks in advance and have fun!
RadioDiscussions Administrators
KMZT Stick worth $100M??
- Thread starter K6JHU
- Start date
100 Megadollars for that signal in LA is a steal. Never mind the classical format, which would almost certainly get the axe in any sale.
A Mt. Wilson stick is worth about $300 million. 96.3, then in Montecito, went for $250 as a stick, too.
Most journalists do not get station valuations.
Most journalists do not get station valuations.
All:
Im a bit confused here. The 50,000 watt KPLS 830 AM sold for a mere $40 million to Arte Moreno, and this stations footprint covers virtually all of Southern Calif, whereas an FM stick would only cover LA/OC.
Are FM signals that much more valuable? I would guess that for a "stick" to go for $100 Million, that the station would have to bill at least $33 Million annually in order for the economics to work, a hefty sum for a station to generate, especially on an already crowded FM dial.
What am I not getting??
Bill Lussenheide
Im a bit confused here. The 50,000 watt KPLS 830 AM sold for a mere $40 million to Arte Moreno, and this stations footprint covers virtually all of Southern Calif, whereas an FM stick would only cover LA/OC.
Are FM signals that much more valuable? I would guess that for a "stick" to go for $100 Million, that the station would have to bill at least $33 Million annually in order for the economics to work, a hefty sum for a station to generate, especially on an already crowded FM dial.
What am I not getting??
Bill Lussenheide
BillLussenheide said:
KPLS puts a usable day signal on about 75% of the LA radio market, and at night it is down to about 60% at the most. It is a deficient AM that does not cover the market well. You can "hear" is many places, but it is not stong enough to generate listening. An AM like KFI might be worth $150 million to even $200 million depending on billing.
There are only a handful of truly decent AMs in LA, KFI, KNX, maybe KLAC, that have ful, full signals. 710, 1110, 980, 930, 1020 are the second tier, maybe worth about $80 million apiece. From there on, no AM is fully viable and competitive.
The Class B Fms, with no billing on them, are worth about $250 to $300 million. A very profitable one, like KROQ, might be worth $450 to $500 million based on a multiple of cash flow.
Almost all the under-45 listening is FM, and the FM shares are about 20% and FM has 80%. FMs have most of the ratings, and all of the choice demos advertisers want. This is why about 85% of market billings is on FM.
KMZT is worth about $300 million, not $100 million.
Sticks are worth what a buyer thinks the potential for income may be.
In general, FMs get about 15 times BCF (broadcast cash flow) and AMs about 10 to 12 times, today. So a station like KROQ, billing $60 million, probably has BCF of $30 million... meaning it is worth $450 to $500 million.
DavidEduardo said:
Are FMs getting 15 BCF today? That seems a little high. I thought we were closer to 10, and even lower, when it seems stations aren't selling for as much as they were a few years ago. Then again, I'm not familiar with L.A. transactions, so maybe it's still higher there.
Rico Garcia said:
Around 15 is pretty standard for profitable FMs. 12 is a good multiple for AMs. Liberman paid 33 times cash flow in Dallas last week, so there are exceptions based on desire to enter a market.
33 times cash flow? Sounds to me like the man has a screw or two loose! How long will it take to make that cash back? There must be a lot of real estate value in the deal!
RadioStarOne said:
No real estate. It is all stick value.
SBS paid $250 million for a stick in LA, with no billing.
SBS has a few screws loose too! Somebody saw them coming!
D
dbdigital
Guest
RadioStarOne said:
From what radio station brokers have told me, 22 times cash flow is about normal for a top rated-market station and 4-5 times for stations in other markets. 33 times cash flow is uncommon.
I know of no bank who will loan money for a station based on 22 times cash flow so only a media conglomorate would be able to afford such a price tag. And if the media ownership caps are relaxed, as Clear Channel has been pushing for, we know who will be buying those high-priced stations.
db
dbdigital said:
22 is way above today's pricing for cash flowing stations. This is not based on ratings, it is based on broadcast cash flow. We are seing deals in the mid teens on FMs, and low tedns for AMs, but a valuable stick is worth whatever the buyer thinks it will make.
SBS's KXOL is a big cas flower, and $250 million for a B in LA is a reasonable price. Radio One aid (in a multi station deal) about $400 million for The Beat, and a station with greater BCF might be worth, today, more than that.
D
dbdigital
Guest
DavidEduardo said:
Once again, David, the all-consuming expert pontificates. The broker has been in business for years and I have no reason to doubt what he told me.
db
dbdigital said:
Here are the facts. I am suspecting you have never bought a station; I have bought many for myself and been part of dozens and dozens of acquisitions with others.
In the peak of the consolidation frenzy, a cash flowing FM would command in the high teens as a BCF multiple. AMs, especially large regional or clears, would be just under that. The most ocmmonly cited multiple was 18, in fact. Naturally, if a group wanted to fill out a cluster, and had few choices, they might bid high on one station or two to create the "cluster synergy" (whether taht ever materialized is another matter).
In today's market, as examplified by the recent ABC deal and sales like Emmis' sale in Phoenix to Bonneville, the multiples are around 15 (although saying mid-teens is more accurate due to variances in value ranging from length of leases to existence of pending legal issues).
If a station is not profitable, it is valued at whatever the seller can get. If the market is desirable and the facility viable, then a multiple approaching that of a mid-tier profitable station may be paid.
Liberman paid 33 times in Dallas because he saw upside, synergy with his TV and cost savings. His bankers did, too, allowing him to use his line of credit for the purchase, although they are secured by his other properties and TV stations. But this is an exception.
SBS paid $250 for the last "unclaimed" LA B (other than Sol Levine's KMZT, which is probably worth upwards of $300 million) because they had a standalone FM (not counting the A's) and badly needed the pair for sales success. But there was no multiple there... which explains why the price was way below the value of a cash flowing B.
RBR has regularly reported on multiples, and there are no 22 x cash flow deals going down regularly, and the 4 to 5 multiple you cite is based on gross billings. If I could get a smaller market station for 4 to 5 times BCF, I would own a dozen. I have been looking at some small clusters in the southwest in smaller markets, and they are all in the 15 times BCF range, with ratings not having a damned thing to do with it.
When you find a smaller (rank 150 to 250) market cash flower at 4x to 5x BCF, let me know. I will give you a 2% commission on the deal if I buy it.
- Status