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WPST, WNJE, WCHR Go To Goldman Sachs in Nassau Bankruptcy Auction!

T

TimeIsTight

The auction results are out, and it looks like Wall Street's Goldman Sachs will be the new owner of WPST, WNJE, and WCHR, at least, until it can sell them to somebody else who is willing to pay what Goldman thinks they are worth.

No doubt, WPST was Nassau's crown jewel, and it would be very valuable to Townsquare Media as part of a Trenton cluster with WKXW in it. But, Townsquare bid $16-million when Goldman wanted $22-million. That does seem like a lot, when you consider Merlin Media just paid that much for a full Philadelphia Market FM signal. But, WPST has a major market sized cume when you add the Trenton, Philadelphia and New York markets together. More importantly, it has a successful business model.

So the question is: Will Townsquare and Goldman be able to find common ground and an acceptable price to both in that $6-million gap? They both have very deep pockets, and very smart financial staffs. It's probably an opportunity Townsquare shouldn't let pass, but if the numbers don't work, the numbers don't work.

As to the other NJ stations, WNJE and WCHR. It probably didn't help that ESPN said this week that it was dropping its LMA of WNJE to relay WEMP. Putting a minimum bid of $700,000 for both stations means even Goldman doesn't see much value there.

You have to wonder what other types of programming might work on WNJE, and who might be interested in using it? WCHR probably has some continuing cash flow from block-time religious broadcasters.
 
The fat lady hasn't sung yet! I bet there will be some wheeling and dealing over the weekend before the Monday hearing! ;D
 
Still a decent chance Townsquare ends up with these stations.

Goldman Sachs is not getting into the radio business. They just think they can negotiate a higher price than the highest auction bid.
 
Goldman Sachs is going to flip the stations for a profit. They can sell them individually and hope to make more that way. Considering 106.9 was sold to Merlin for a similar price, it seems that 94.5 is overvalued. Merlin only got the license and the transmitter. They had to build a new studio and do major work to the transmitter. The Family Radio audience and brand has almost no value. However, WPST's studio and transmitter are well-maintained, and it's a solid brand that is very profitable.
 
What has been the effect of WPST moving to 94.5 from 97.5 on Nassau?

Has the swap had a negative or positive effect?

Jeff in Sa-ra-so-ta!
 
badjef said:
What has been the effect of WPST moving to 94.5 from 97.5 on Nassau?

Has the swap had a negative or positive effect?
Click to expand...

The effect on Nassau? They got a bunch of money for selling 97.5 and apparently put on their Bad Idea jeans before deciding how to spend it. As for PST, I don't think the move to 94.5 has affected the on-air product or the public's acceptance of the station at all. The signal is probably a little less desirable overall than the 97.5 was and they have the disadvantages of being effectively a standalone station in a nation of clusters, but they seem to be a fundamentally sound operation.
 
It looks like the bankruptcy court approved all the sales of the Nassau Broadcasting stations as was reported last week.

I am assuming that if there were any major changes in bids, with different outcomes, any good reporter would have put them in the lead of her story.

So, the fat lady has sung, and it, probably, all went down as expected with no last minute bids rushing in. And no changes in outcome from weekend negotiations.

Details here:

http://www.law360.com/mergersacquisitions/articles/337898/nassau-broadcasting-s-48m-radio-station-sales-get-clearance

(I didn't sign up for the full report, but if anybody does, please post any changes in outcome from what was announced last week)
 
Goldman Sachs could easily outbid anyone since it was using Nassau's debt to Goldman as its "currency" instead of cold, hard cash.
 
Goldman Sachs could easily outbid anyone since it was using Nassau's debt to Goldman as its "currency" instead of cold, hard cash.
Click to expand...

As you know, Goldman long ago put up its "cold hard cash" and will only get a small fraction of it back.

Any "cold hard cash" that anybody else paid to buy the stations would ultimately go back to Goldman.

Goldman just doesn't think the bids were close enough to the true value of the stations. It will now get to play with them for a while, hope the market improves, and expect to get more money at some future point.

You can bet the big money boys did all kinds of number crunching, with all kinds of spread sheets, and expect to make a better deal for themselves by selling the stations, on their own, sometime down the road. They don't want to be in the broadcasting business a day longer than they have to.
 
Goldman Sachs should keep the staff at WPST since it is profitable. It ain't broke, don't fix it. I doubt anyone working at Goldman Sachs knows how to program a CHR station, they probably don't even like the music. Maybe they can put a business news format on 1040 for the interim until it can be sold. At least everyone working at PST can now say that they were employed by Goldman Sachs.

Credit bidding is important because it allows secured creditors to have control over their collateral. Goldman Sachs thinks that the market value of the stations will rise in the future, and will sell later instead of selling now. Any profit they get from running WPST is a bonus for them.
 
Goldman Sachs should keep the staff at WPST since it is profitable. It ain't broke, don't fix it.
Click to expand...

For the sake of the radio types at PST let's hope Goldman follows your advice.

In going through the numbers, you have to wonder if Louis Mercatanti ever wishes that he was much less ambitious about growing Nassau with so much debt. If what's being reported is correct, Nassau took on about $250-million in debt to buy stations, and at the auction last week it sold a few of them for about $10-million in cash. Goldman is holding stations it thinks are worth about $38-million. So even if Goldman gets the prices it is looking for, stations that were bought with $250-million in debt will have been sold for about $48-million, leaving lenders with $200-million in loses, and that ain't chickenfeed even on Wall Street.

If Mercatanti had just stuck with PST, and paid it off, he, and a lot of lenders, would be much wealthier people today. He would still own a profitable radio station, instead of losing an entire company in bankruptcy. But hindsight is always 20-20, and over-leveraging, to grab all you can, looked smart, for a while. You have to give those folks in Maryland credit for selling two stations to Nassau for $18-million and then buying them back, along with another, for a total of $6-million, but possibly they were just "lucky" rather than that "smart."

I started another Nassau thread in the land of WODE on the Lehigh Valley board, there's some additional comments there, if you haven't checked them out yet............

http://boards.radio-info.com/smf/index.php?topic=211697.0
 
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