No lending, no deals, M&A on hold


When CBS Corporation announced plans to divest about 50 radio stations, the company indicated that talks were already underway and deals could be announced within 30 days. That was 64 days ago. But it’s not just broadcasting where lending for big deals has dried up. It’s not even just media. The “credit crunch” we’ve talked about for over a year has never been as bad as right now.

We’d already heard from brokers that they’d had deals blow up before they were ever announced or filed because the buyer, who believed they’d cut a good deal, couldn’t find a lender to finance it. Now we’re hearing that deal flow has slowed to a trickle because only companies with cash on hand or credit lines already in place can buy anything.

CBS Corporation CEO Les Moonves told a recent Wall Street conference that the company will not sell if it can’t get good pricing for the radio stations. CBS is handling the bidding in-house, without a broker or investment banker, so the grapevine has been silent since the initial bids were due.

Meanwhile, a much smaller deal was put on hold this week as Nassau Broadcasting was unable to nail down financing for a $22 million purchase of WFKB-FM in the Reading, PA market. The seller, WDAC Radio Company, asked the FCC to extend the deadline for getting the sale to closing. (See today’s story in RBR Media, Markets & Money)

If it’s hard to find money for a deal that size, what about CEO James Dolan’s plan to sell off some non-core assets at Cablevision? Don’t look for him to get in any hurry in the current marketplace. 

Tribune Company isn’t looking to sell any media assets, but it is trying to sell the Chicago Cubs and Wrigley Field to cut its huge debt load by a billion bucks or so. Fortunately, professional sports teams are the ultimate toy for billionaires, so the folks in that auction will be able to write a big equity check. But even they may have to do some arm-twisting with their bankers.

RBR/TVBR observation: What a great time to buy media assets – but only if you have piles and piles of cash lying around. Of course, no one does business that way. At some point the folks on Capitol Hill will come to agreement on what will be done to return liquidity to the credit markets. But we would not expect media M&A to be first at the trough for new loans. Lenders will continue to be skittish until they get a handle on just how badly the economic downturn is going to impact ad sales, which were not healthy even before the line of financial dominoes began falling on Wall Street.

Publisher note: It is time to stop talking the talk but to walk the walk.  It is Time to Invest if you are a proactive company that has the vision and leadership qualities.
Only for the real players – it is time to search out companies with assets that have taken the risks and the path of today’s growth and that is the internet. It is time to develop a fully functional website that interacts with your audience, listeners, your local communities.