Investing In Radio: Good Or Bad?

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Prospects for Radio as an Investment in 2020: The Real Street Talk is just one of the panel discussions set for Forecast 2020 coming up November 20 at the Harvard Club, NYC. Paul Homer, Managing Director Northwood Venture, will be a member of the panel looking at the ebb and flow of the buying and selling of radio stations in the new year. He gave Radio Ink a preview.

Radio Ink: How can an investor compete with the “Big Box” radio companies?
Homer: I think the opportunities for investors really exist in the smaller markets. Not necessarily in going down to market 300, but I think there is a sweet spot from markets 50 to 150 where radio is the best medium for advertisers.

We have some stations here in Suffolk County where local advertisers can’t handle a heavy TV schedule because TV costs a lot more. There’s limited distribution with the newspaper now. So the best, most affordable, local way for them to advertise is on the radio. They are seeing a healthy return on investment on their radio dollars.

Radio Ink: Are “Mom & Pop”-owned stations worth looking at?
Homer: There is a big opportunity there. One of our largest successes has been in buying generational stations. We bought a cluster of stations in Ocala that had been owned by a family for about 30 years. The three sons decided they were not interested in being in the radio business. We bought them about six years ago and turned them around from cash flow break even to making a significant profit now. I think that there are generational stations out there that may have a bloated overhead, but when managed properly, they can be quite profitable.

Radio Ink: Is being debt adverse a good or bad trait for someone considering investing in radio?
Homer: I think being debt adverse is a good trait for a radio operator. Given the swings in radio revenue over the past few years and knowing that you don’t have to make a monthly debt payment of any substantial size, can give you flexibility when times may get a little bit lean.

Radio Ink: How is the recent Third Circuit Court ruling against the FCC’s media ownership rules going to impact radio as an investment?
Homer: It means that deregulation in the radio industry is far more unlikely to happen than we would have hoped. It’s going to mean that there are less radio stations available for acquisition from an investment perspective. There were a lot of people hanging on hoping this would be their exit strategy. It will be interesting to see how this plays out; to see if people move forward with selling regardless, or hold on to their business.

Don’t miss the rest of what Paul Homer has to say about prospects for radio as an investment, exclusively at Forecast 2020. He’ll be joined by Robin Flynn, Managing Director/Research S&P Global Market Intelligence, and Paul Miller, Managing Director Cerberus Capital Management, in a session led by Randy Michaels, CEO of Radioactive, LLC.

See the full agenda for Forecast HERE.

Register HERE. Early bird pricing ends October 18!

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