NEW YORK — Yes, some of the biggest radio broadcasting companies in the U.S. have struggled of late with their finances. Yes, television broadcasting companies stand at a crossroads as NEXTGEN TV seeks to attract consumers as OTT and FAST channels swiftly grow their audience and share of ad dollars.
Yet, investing in broadcast media remains an opportunity for strong cash flow and profitability, a Forecast panel featuring a billionaire known for supermarket ownership in New York, a veteran media broker and the SVP of Government Relations and Distribution at Gray Television shared on Wednesday.
With fabled radio and television executive Randy Michaels serving as the moderator, the former head of Jacor Communications — known for his brash, no-holes-barred approach some 25 years ago — opened the panel with sobering slides featuring the year-to-date stock performances of Saga Communications, Townsquare Media, iHeartMedia and Audacy Inc.
The latter two radio station owners are suffering severe share erosion with their stock valuations, putting the marketplace in a potentially difficult position. Why buy Radio when the biggest companies are struggling?
The answer perhaps lies in the fact that companies such as Saga have been among the sector’s strongest on Wall Street for years. Debt-free privately held companies, meanwhile, are healthy.
Thus, the advice given from John Catsimatidis, the Gristedes supermarket chain owner who also heads Red Apple Media — owner of WABC-AM and WLIR-FM in New York — is simple: “Debt kills.”
Catsimatidis offered the statement after noting how much he enjoyed ownership of radio stations, and talked of his commitment to making WABC a winner again. He noted how he had hosted a radio show at crosstown WOR under prior ownership after a mayoral campaign concluded. When WOR was sold to iHeartMedia, he was disgusted — Catsimatidis was willing to write a check and buy it for upward of $30 million.
For less than half of that amount, he instead bought WABC when Cumulus Media put it up for sale.
Station valuations were the focal point of the conversation between Michaels and Bob Heymann, the Chicago-based media broker with Media Services Group. Heymann rattled off the top deals of 2023 by type of broadcast station, noting that Waterman Broadcasting are among “the luckiest sellers in the history of broadcasting.” How so? They spun WBBH-20 in Fort Myers, the market’s NBC affiliate, to Hearst for $220 million. By comparison, non-affiliated KUSI-51 in San Diego was sold for $35 million.
Then, there’s the radio industry valuation woes. The top deal of 2023 involves WUFL-FM (formerly WDRQ) in Detroit, which Cumulus Media sold for $10 million to Family Life Ministries.
While Catsimatidis’ love of radio ownership illustrates how others can emulate his entry into radio, which could see him purchase stations in Southwest Florida, where he’s investing in real estate ventures, Gray Television’s Rob Folliard shared with the Forecast attendees that broadcast television is still a very good business. “We have far more eyeballs than anyone else, and those fundamentals aren’t changing.”
With broadcast TV’s reach still a strong pull for advertising, Folliard pointed to how ABC’s ratings have grown by putting Monday Night Football on the network this season. Yet, local TV news is an even bigger draw, in particular for Gray stations at 6pm, he shared.
Folliard also talked of how ATSC 3.0 and NEXTGEN TV will make TV more valuable, perhaps increasing from the 7x-7.5x multiple for TV seen by Gray TV today.
For radio, Heymann puts the multiple at 5x-6.5x.
