Year Ahead Could Bring More Station Dealing

BIA/Kelsey updates its 2017 transaction totals and peeks ahead
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CHANTILLY, VA.—Will 2018 bring an increase in broadcast station trading in the United States? There are reasons to think it might.

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Research firm BIA/Kelsey noted that 2017 was a strong if not overwhelming year for station sales. Its updated year-end figures have 107 TV stations selling for a total value of $4.7 billion, and 755 stations sold for a total of $3.3 billion.

“The number of television stations sold increased by 10 over the previous year while the total value of those stations sold decreased by nearly $600 million,” the firm wrote. “On the other hand, the number of radio stations sold increased by 179 and the total value of those stations also increased by over $2.8 billion. Those increases can be credited to the Entercom acquisition of CBS Radio during the year.”

Noting that Entercom was able to finance the transaction and integrate these stations, BIA/Kelsey called it “a very good sign for the local radio industry when business success follows such a major acquisition.”

What’s ahead? The research company noted that the Federal Communication Commission has relaxed rules on local ownership of TV stations and on television-radio and broadcast-newspaper ownership. “While there is some question as to whether some or all of these new regulations will be challenged in the courts, there is some optimism that this relaxation will lead to an increase in station trading activity,” it stated.

Also possibly heralding change is federal tax reform. “By lowering the overall corporate tax rate and full expensing of new capital equipment for five years,” BIA/Kelsey wrote, “the values of broadcast properties (much like most other businesses) will most likely increase. This potential positive influence on these values should be taken in context of the longer-term trend of values reflecting the increased competition faced by local radio and television stations.” The company reported it saw some increases in the values of publicly traded broadcast companies while tax reform was being worked out but added that it will take time for increased values to lead to higher prices for stations. 

“At the same time, one cannot overlook the continuing strengthening economy, the record high Dow and how it all affects station transactions. Coupled with the impact of the deregulation and the new tax legislation, this stronger economy may lead to increased activity by some of the publicly traded broadcast companies, as well as privately held companies looking to expand.”