Broadcast station trading has been unimpressive this year. If you’re a regular reader of RBR/TVBR, you know that big deals have been few and far between. Radio One was under pressure to sell its Los Angeles station, after failing to turnaround ratings and revenues, so it ended up taking $137.5 million for a full-signal LA stick, compared to the $250 million that SBS paid in a similar LA stick deal eight years ago. Ouch! Would-be sellers who don’t have to sell have been pulling back offerings, the most prominent case being Clear Channel deciding to hold onto 145 of the 448 medium and small market stations it had marked for sale. The TV trading market has been a bit better, with deals such as Local TV buying a group of medium market stations from News Corporation and Media General now completing the sale of five non-core stations it decided to divest. But there is no hot market for station trading on either side.
The reason, of course, is credit availability. The credit markets tightened dramatically about a year ago – and they haven’t yet improved much.
“The credit markets have tightened and will continue to be difficult for borrowers during the second half,” said Larry Patrick, Managing Partner of Patrick Communications. “Lenders who had previously used advanced rates of 60-70 percent are now at 50 percent or lower. The national credit problems affect the broadcasting industry. Many smaller lenders are simply not making loans. Seller paper and somewhat lower pricing is necessary to get many deals completed,” he suggested.
So, the situation remains much the same as it was in March, when we reported that panelists in the Third Annual RBR/TVBR Financial Roundtable saw a very tight market for financing of radio and TV deals. They said that some deals were still getting done, but not to expect a robust market for stations until the national economy and the general credit markets improve significantly. They haven’t.
You can still read the roundtable discussion.
