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Spectrum Aggregation Spurs TV Station Sales

WASHINGTON— Clearly positioning themselves for the upcoming FCCspectrum auction next year, non-broadcast entities, or “spectrum aggregators” as they are sometimes called, purchased nearly 40 full-power TV stations in the past two years, according to market research firm SNL Kagan, representing $345 million in sales.

Kagan said the most prolific buyers include NRJ TV LLC, which spent $234.2 million on full-power stations, and OTA Broadcasting, a subsidiary of MSD Capital (Michael Dell’s company), with deals totaling $52.8 million. A third company, Locus Point, has acquired seven stations, all at the end of last year (November and December 2012), and all Class A stations.

Station spectrum buyers planning to participate in the auctions are counting on strong demand from wireless buyers and a hefty profit versus what they invested in the stations.

“While averages for wireless spectrum comps are still far above those paid for the TV station spectrum at benchmarks typically north of $1 per MHz per pop, it is still unclear how much the wireless players will bid at auction and how the mechanics of the auction and distribution of proceeds will work for TV station owners,” Kagan said.

And indeed, they could stand to make some serious cash. In November 2011, for example, NRJ TV LLC purchased Multicultural Television Broadcasting's WSAH New York (Bridgeport, Conn.) for $22.8 million, and in September of that year, the company purchased WTVE, in Philadelphia for $30.4 million. Earlier, it purchased two other multicultural stations — KCNS San Francisco, for $15 million, and WMFP Boston, for $5 million.

Fairfax, VA.-based OTA Broadcasting acquired WLCW, the CW affiliate in Providence, RI, for $13.75 million this past January; KTLM, a Spanish-language television station in Rio Grande City, TX, for $8 million in 2011; and KVOS, the Me-TV affiliate in Bellingham, WA, in December 2011 (financial terms not announced). The Me-TV affiliate was OTA's second station in the Seattle-Tacoma market. Earlier in 2011, it bought KFFV, an independent multicultural station, for $5 million.

All told, these “speculators” acquired 39 full-power and low-power (Class A) TV stations in 2011 through January 2013, with eight station deals already announced in 2013.

“Value bench-marks in these transactions have risen sharply in 2013, but still have plenty of head room before they hit wireless spectrum deal price points,” Kagan said.

SNL Kagan said it has logged $344.8 million worth of TV station sales to groups thought to be acquiring the TV stations for purposes of tendering them in the FCC spectrum auction scheduled for 2014. These include 14 full-power stations and 25 Class A station sales. Overall, Kagan said, the average value per TV home paid based on the publicly released deal prices has been $3.74, and the price paid per MHz/pop has been $0.25.