Where are multiples these days? Still high - - Part 4
There really hasn't been a major deal based on cash flow in a large market since Citadel's purchase of a four-station Memphis cluster from Barnstable for $100 million very early this year (1/30/04 RBR Daily Epaper #20). "That multiple was probably 20 times. We haven't seen a deal yet that reflects the downward trend in multiples for the publicly traded stocks," said broker Elliot Evers of Media Venture Partners.
"With the pure-play peer group trading down - - and the Barron's article and the Forbes article - - it will be interesting to see a deal that did involve cash flow and set a benchmark," Evers noted. But he doesn't think even the decline in stocks will push pricing down for top properties. "I think if something of substance with cash flow came up, that you'd still see the multiples paid that are very, very high. It's just the scarcity factor," he said.
Evers noted our RBR observation in the Amigo sale that Jim Anderson and Chuck Brooks held onto two markets as they cashed out their equity backer so that they would have a platform to build on in an environment where it is extremely difficult to enter the radio business. "And it's true. The inventory is just scarcer than hen's teeth," Evers said. "So that has to be balanced against things like maybe the industry is maturing and slowing down, as per Forbes and Barron's. Maybe we are going to see more competition from MSN and the iPod and all that stuff, and XM and Sirius. All of those things are negatives, but I'll tell ya, if we get a decent cash-flowing cluster of radio stations or a small company - - it goes fast and it goes at astronomical multiples."
That is, if multiples even come into play.
This article appears in its entirety in the November issue of RBR Solutions magazine. To subscribe to the all new January debut issue of Radio and Television Business Report - The Real Business Magazine, see below to receive it - - or call April McLynn here to get your free copy: 703-492-8191.
Are you reading this from a forwarded email?
