The simple fact of the matter is that if you place the stations in the big radio swap between CBS and Beasley next to one another, they don’t quite match up. But add in strategic considerations and, according to radio financial expert David Schutz, the deal makes perfect sense, or perhaps we should say dollars and cents.
Taking all things into consideration, Schutz estimates the total deal value going both ways at $100M.
Looking at the matter on a hypothetical – stress that – hypothetical basis, Beasley would appear to have the upper hand. It would appear that it is picking up a multiple of somewhere around 9x for the stations it is giving up, while CBS will be picking up a multiple of somewhere in the neighborhood of 7x-8x. But that completely leaves out the strategic implications of the deal.
Beasley is a pure radio company that has long experience and a high degree of comfort operating in smaller markets, says Schutz. Charlotte in particular is a perfect fit with some of its other North Carolina markets.
For CBS, it moves its radio portfolio upstream into the bigger markets where it is much more comfortable operating. And it has synergies to exploit in both markets where it is gaining stations.
The Miami stations add new radio territory and will operate in tandem with CBS WFOR and MNT WBFS.
In Philadelphia, in addition to the radio properties it is keeping, it has CBS KYW and CW WPSG. In radio terms, it is vastly improving the makeup of its radio cluster, going from a 3 AM/2 FM group to a much preferable 2 AM/4 FM group.
Schutz believes there may be other things on CBS’s mind here as well – he thinks the company’s radio brain trust may well be taking into account the massive success Hubbard is having with WTOP’s radio and internet presence a mere 125 miles south of Philly in Washington DC. CBS would well be considering building on its own massive news presence in Philadelphia to build a radio news juggernaut there.
Bottom line: CBS might appear to have gotten the short end of the multiple stick in this deal, but as far as it’s concerned, it’s well worth it. It can be seen as a premium paid to push its radio market presence upward to the large cities it prefers, in a way that gives it multiple synergies to capitalize on. If CBS can attain greater synergies in Philadelphia and Miami, their effective multiple may look lower.
And for Beasley, it’s just a whale of a deal.
Here is a memory refresher on the stations changing hands.
The stations going from Beasley to CBS include:
Philadelphia
WXTU-FM
WRDW-FM
Miami
WPOW-FM
WKIS-FM
WQAM-AM
The stations going from CBS to Beasley include:
Philadelphia
WIP-AM
Tampa-St. Petersburg
WLLD-FM
WHFS-AM
WQYK-FM
WRBQ-FM
WHFS-FM
WYUU-FM
Charlotte
WBAV-FM
WBCN-AM
WFNZ-AM
WKQC-FM
WNKS-FM
WPEG-FM
WSOC-FM
In Philadelphia, Beasley is retaining WWDB-AM; CBS is retaining KYW-AM, WPHT-AM, WIP-FM and WOGL-FM.
