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To sell, or not to sell? Is that your question? Part 1

If you've thought of selling your radio or TV station(s), how do you know if now is the right time to sell? And how do you figure out how much it's worth? After all, no one wants to leave money on the table, nor do they want to put on a price tag so high that the sale never happens. If you are in the market to sell, or just pondering the possibilities, we've gathered some expert advice to help you figure out whether and when to pull the trigger.

We asked veteran broker Frank Boyle, of Frank Boyle & Co., what should people be considering if they are thinking of selling their station? "The most important kind of issue, which is simplest to check, is what is the motivation of the guy who is selling the station? How anxious is he to do this? If it's something that he's not in a big rush to do under the current circumstances, then it would behoove him to take his time to make sure than he can maximize the price - - get the biggest bucks for his transaction. The immediate concern for a guy who is actually going to market is going to be the quality of the prospects - - are they thoroughly screened and do they have enough money? The other thing at this particular time, what you professional journalists call the 'quadrennial spike year,' is sort of a good news-bad news scenario. If I try to use the financials for the station in 2004, then the guys who are buying it will say 'I don't know if we want to use this year as the base year upon which we are going to premise a great sales multiple.' This kind of a year comes only once every four years, with the election and Olympics, which means you will get an unusually high amount of political advertising. They'll say 'I'm not going to pay a premium as though it's going to happen every year.'"

Is that a consideration for radio, or just TV? "Both. Of course, the next question is where are you located? If you're in places like Iowa and New Hampshire, places with important primaries, or key states [in the general election], then you're going to enjoy a nice bump in political ad revenue. You're correct, there's more of it that goes into television than radio, anyway that you want to measure it. Of course, this won't happen for the next three years in the same proportion. So the good news is that you still have this good base to sell from, even if it's called an aberration, vs. having a bad base, which if your were the seller would call an aberration. The good news right now is that in my 20 years in the brokerage business, there has never been more money available to chase deals that I've every been aware of. Unless the deal is, say, for $5 million or less, by a buyer who's a first timer, then it is difficult to find money in that category. So if you're the seller in that situation, you're gong to be concerned whether of not the buyer can get the dough. As far as funding, it's the equity portion that's difficult to come by. The simple thing to come by is the senior debt, or junior, subordinated or mezzanine - - whichever term you want to use. Simply put, it's a great time to sell a radio station. There's so little inventory out there, almost regardless of the size of market."

This article, in its entirety, appears in the August issue of RBR Solutions magazine.