To sell, or not to sell? Is that your question? Part 8

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.

If someone has already missed out on consolidation and the big players in their market are already full up, do they still have an opportunity to get a good price out of their station?

"That takes a careful assessment, because the owner, or more likely the broker, has to uncover the highest and best use of that station. It's like a farm near a large market. Sometimes the best use for that farm is what it's doing. But sometimes you can take this farm - - a not highly perceived asset - - and look at it as an Urban station, or more likely as a Hispanic station. Then you can get a 25% premium because the buyer perceives that they can go Spanish. You have to do a careful assessment of the possibilities," said broker Tom Gammon.

So, is this a good or bad time to sell?

"In television, the regulatory uncertainty has pretty much stalled the deal market. Everybody is waiting," broker Larry Patrick replied. "If more duopoly is allowed further down or higher levels of it in the big markets, if TV-newspaper crossownership is allowed, it's not going to open a floodgate, but it is going to make some people who are sitting on the fence go ahead and jump off and decide either we're in or we're out. On radio, what's happened is that it somewhat tracks retail sales. Even a few months ago prices were a little bit higher than they are right now. In the past couple of weeks some of the stocks have been battered a little bit [Editor's note: This interview was in early June.] Cumulus, a really excellent company, was at 18 and now it's down to 16. It's still the best in the business in terms of a trading multiple, but it's not where it was. Whenever that happens, pricing comes down. You've heard the term before that they'll buy things that are accretive. If I can buy something at the outrageously high multiple of 14, but I'm trading at 18, that actually is accretive. But if I'm only trading at 16 that gap gets a little tighter and I'm not sure I'll do the 14. The bottom line is this, a lot of consolidation has already happened. We clearly are in the 7th or 8th inning, if not almost all the way there. What's happening is that things that are smaller clusters that were ignored in the land rush are now pretty attractive. In terms of mom and pop operators, if you've got a strong rated cluster, or even a pretty strong regional, unrated cluster, if it's fairly successful, you may over the next year or two or three, find that more brokers are calling you and more owners are looking at you."

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