The brokers of Media Services Group have been meeting in Ft. Lauderdale and have issued their station trading outlook for this year. MSG predicts that small to medium market radio properties will trade at 7-9 times broadcast cash flow during 2008, and 9-11 times BCF for larger markets.
“We think the industry is resetting pricing, and expect the year to be record setting in terms of station trading volume. The first half of the year will be affected by capital constraints, which we expect to loosen in the second half,” said George Reed, managing director of MSG. “The reports from our people at the meeting indicate that as the year progresses, market conditions will improve from current levels. We expect an unprecedented volume of stations to change hands by year-end, the most since the passage of the Telecommunications Act in 1996,” Reed added.
RBR observation: Obviously the MSG brokers have a vested interest in seeing lots of station trading, but there is logic to their forecast. The credit crunch caused by the subprime mortgage debacle has mostly impacted very large deals – say over 100 million bucks and especially into the billions – which banks have to syndicate. But there has been no shortage of lending available for deals in the tens of millions. So the holdup in the station trading market has been the gap between bid and ask. When will that gap narrow? The MSG guys say the second half of 2008 will see would-be sellers adjust to the new pricing reality.