S&P Global Market Intelligence senior research analyst Justin Nielsen says based on a 7x or 8x cash flow multiple, a sale of the CBS station’s could yield $2.8 billion to $3.2 billion. The problem with that scenario is what one group head told us last week. According to this group head, “CBS wants 12X cash flow.” Nielsen says in CBS radio deals over the past 10 years, “the average multiple was 9.8x, including 73 stations at a little over $1 billion in deal volume. However, the last three deals since 2012 — including the sale of five stations to Palm Beach Broadcasting for $50 million; the 14-station swap with Beasley Broadcast Group Inc. valued at $150 million; and the sale of KFWB-AM to Universal Media Access for $8 million — have been between a 6.3x to 7.2x multiple, more in line with current radio station deal values.”
Richard, Robin is correct. New York and LA, like most if not all major markets, sadly are NOT “growing” radio markets at all. In fact, both LA and NY radio revenues are still down about 50%, compared to the billing levels of pre-2008. And listenership to AM is now 80% comprised of 50+ years old. The smart broadcasters in many markets have now put news and talk on NE of their FM statiojs. Not so in LA, but LA is a very uncreative radio market with very weak market management, especially at IHeart.
@Richard Robbins – I think you may have some dissenting opinions about the word “growing” in your statement, “These are trophy stations that are at the center of growing mega markets.” Not sure an increase in population necessarily equates to increased listeners or revenues going forward..
I’m a Private Equity manager with a little knowledge of radio valuation models. Q: ask a qualified “media broker” his opinion about CBS Radio. Q: Over time, since 2001, plenty of heritage radio deals have been closed at TWELVE X cash flow, why should CBS take 7 or 8? Q: Simply look at two markets: New York and L.A. How do you value 1010WINS OR KNX1070? These are trophy stations that are at the center of growing mega markets.
S & P is hardly a rock solid source for such data; ask Mr. Nielsen what’s the Empire State Building worth.