Can we just end 2016 today?
That’s a refrain many media brokers may be saying.
“This was mostly portfolio tweaking,” says George Reed, a Media Broker with Media Services Group based out of the Jacksonville, Fla., office. “Inventory is, and has been, limited.”
But, the next 12 months look good, says Reed and another broker who shared their thoughts on 2017 with RBR + TVBR.
“I believe that 2017 trading will be driven by deregulation, an improving economy, and, on the TV side, the aftermath of the spectrum auction,” Reed says. “Taking the easy one first, TV will be robust. The winners in the auction may have money to reinvest; the losers will be looking for Plan B.”
On the radio side, a new administration in the White House and a new FCC will probably be the single biggest catalyst for trading, Reed adds.
“For the first time ever, there are real prospects for meaningful and sweeping deregulation,” he says. “Antiquated and illogical ownership rules will likely be swept away, with a profound impact on trading. Throw in an improving economy, a downward bias for capital gain tax rates, and continued low — though increasing — interest rates, and 2017 looks pretty inviting.”
Meanwhile, an elimination of the subcaps “would be a giant catalyst for trading and value creation,” Reed says.
But, he warns, “It should be noted that Cumulus Media and iHeart Media continue to be the giant elephants in the room.”
Still, Reed says, “2017 will be a great year to sell for those who have been awaiting an opportunity to exit.”
SLUGGISH DEAL STREAM STILL IN PLACE
“Radio transactions … when transacted … will still remain in the five-to-six times cash flow range, with the deal stream continuing to be sluggish.”
That’s the prediction of Stamford, Conn., based media broker Richard A. Foreman.
Meanwhile, TV will benefit from an improved deal market in 2017. Why?
“With the probability of a failed auction, transactions will now become available and a number of deals should transpire, mostly in single deals and some additional slight pruning by the major groups,” Foreman says.
With a new administration in the White House, and a new FCC, will this impact deals?
Not only will media cross-ownership rules in place since 1975 disappear, Foreman believes “a possible slight lessening in the in-market r
estrictions on multiple ownership” is on the horizon.
Are we still on track to see some new entrants and longtime family broadcasters exit ownership?
“In terms of new entrants, barring any technological advances, I don’t see many new players in radio and television,” he believes.
RBR + TVBR wants to hear from you. What are your prognostications for 2017? Let us know at [email protected]