Shape of Things to Come

[Element9]

To paraphrase Max Frost and the Troopers or the Yardbirds:

From Inside Radio

Lenders takeover BMP.
Patience has run out and the investment group backing Border Media Partners is moving forward with a takeover. Insiders say BMP hasn’t paid on its debt in nearly two years. The company didn't respond to a request for comment. More on the story in today's Inside Radio.

Takeover-lite at Mapleton.
In what appears to be another sign of how lenders are putting the squeeze on radio groups, investment bank Lazard Group is taking control of Mapleton Communications. Read the full story in today's Inside Radio.

Major market FM prices keep falling.
The New York Times will ultimately get $45 million as part of a three-way deal in New York for Class B classical FM WQXR in the country’s largest market. From atop the Empire State Building, WQXR’s signal contour reaches 15,367,000 people, suggesting a station metric of only $2.93 per-person — a very low number even by recent historical standards.

Anybody ready for a track from "Who's Next?"

 

[SirRoxalot]

Hmmmm. Tough choice. There's "Bargain", "Baba O'Reilly" (a/k/a "Teenage Wasteland"), and "Won't Get Fooled Again". All three seem to apply in varying degrees.

 

[Bob1370]

"WQXR’s signal contour reaches 15,367,000 people, suggesting a station metric of only $2.93 per-person — a very low number even by recent historical standards."

Which implies that a full market coverage station in either the Rochester or Buffalo metros (each with 1.1 million population, give or take a few) ought to fetch, what, $3.2-3.3 million? Wow, that's maybe a third of what you'd have figured two or three years ago (and a fraction of what stations changed hands for back in '07, IIRC). Shows you, first, how inflated station values were then, and how deflated they are now.

 

[Element9]

"WQXR’s signal contour reaches 15,367,000 people, suggesting a station metric of only $2.93 per-person — a very low number even by recent historical standards."

Which implies that a full market coverage station in either the Rochester or Buffalo metros (each with 1.1 million population, give or take a few) ought to fetch, what, $3.2-3.3 million? Wow, that's maybe a third of what you'd have figured two or three years ago (and a fraction of what stations changed hands for back in '07, IIRC). Shows you, first, how inflated station values were then, and how deflated they are now.

Good observation Bob. If a company can buy into Buffalo or Rochester for $3.5 to $5 million per Class B FM, operators like Regent who bought in at $125 million are screwed. This scenario may demonstrate just how dire things are for an operator like Citadel, which has one foot in the grave and the other on a patch of ice.

 

[Bob1370]

I used to think Larry Levite got out of radio too early when he sold WBEN and Star 102 for, what, $15-16 million or so? Now you'd be extremely lucky to get that much even for a successful pair of stations like that.

Guess he was right. Better to leave the game a little early, when you've still got your good fastball, than to hang on and leave too late, I guess...

 

[aaronread]

Correct me if I'm wrong, but station values are usually based on a metric of the revenue for X months prior to the sale. Obviously market forces come into play here, too...NYT is hurtin' for cash and people know it, and the credit market is still pretty tight so it's hard to finance a multi-million dollar deal on a hurting industry like radio...but it wouldn't surprise me if the revenue at WQXR was below market averages. Classical formats rarely rake in the dough as it is, nor would it surprise me if the NYT intentionally focused more on "purity" of the format over revenue with WQXR.

So yes, the market for stations is clearly in the sh*tter. But I wouldn't quite extrapolate the WQXR sale and say that Rochester Class B's are only worth X dollars.

 

[Element9]

You make a valid point with regard to billing, Aaron. And an equally good point about values being in the toilet. WQXR, even as a "low biller" is nonetheless opearing in Market #1 (one, one, one... slap back echo) and the sale price is low. Would WPLJ and WHTZ command higher prices? Undoubtedly, but the again, not what they may have fetched two to three years ago. And besides, who's buyin'? Moreover, who's lendin'?

And then, for a bit of irony, we have this story from Inside Radio:

Stern, Limbaugh top Forbes list. Howard Stern’s $100 million a year from Sirius XM Radio makes him radio’s highest earning personality on the annual Forbes list of top-paid entertainers. Rush Limbaugh makes about half that and ranks fifth thanks to an eight-year, $400 million contract. L.A. morning man Ryan Seacrest is ninth with $38 million – most of which comes from “American Idol” and other TV projects.
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Seacrest is a lousy jock with marginal talent and great looks, who, by the grace of God and a good agent, landed a gig on a TV show that's watched by 30 million people. Nonetheless, he displaces good, live, local jocks throughout the country. Nobady said life was fair. Just ask Dickey & Suleman who are watching their tin horn empires crumble beneath their ineptitude.

 

[ThePickleReport]

So yes, the market for stations is clearly in the sh*tter. But I wouldn't quite extrapolate the WQXR sale and say that Rochester Class B's are only worth X dollars.

The WQXR sale has some asterisks that I would put on it. I've been told The NY Times had been working on that deal for awhile, and the bottom line is that they wanted to pass the classical format on to someone. What I wonder is which is of greater value: the P.R. hit they didn't take by selling the station to the top bidder and ditching the format, or the difference in the money they presumably left on the table?