The TV station transaction marketplace has finally shown some signs of life, with the sales of the McGraw-Hill, Freedom and Four Points groups. With Newport Television rumored to be up for sale, the question now is what sort of price tag to expect.
Sandy DiPasquale’s Newport, backed by Providence Equity Partners, bought its stations from Clear Channel Communications for $1.012 billion in 2008. What are they worth today?
Wells Fargo Securities analysts Bishop Cheen and Davis Hebert offered some insight in a note to clients:
“In today’s highly selective and less than robust M&A market for ad media assets, we think Newport could be valued at only $926 million at 8x a projected two-year average BCF of $115.8 million ($103.5 million in FY 2011 and our projected $128.0 million in FY 2012). Our two-year average multiple of 8.0x is based on 11 TV transactions large and small during the past 15 months. There has long been a multiple choice in TV transactions, and our analysis shows three choices: the trailing one-year multiple favored by sellers, the one-year forward multiple favored by buyers who have visions of growth and synergies, and the average two-year trailing multiple that we think most represents the value of TV stations in a two-year cycle of political revenue feast and famine. Thus, at 8x average two-year BCF, we think we are using the most beneficial multiple to Newport. Compared to BCF multiples of publicly traded TV equities, our selected metric is still a full turn higher.”