WBZ cuts Leveille, Cuddy, Dyett, poss. Desmarais

Alan Tolz atolz@comcast.net
Sat Jan 3 13:00:47 EST 2009

There's a proportional relationship between the prices of broadcast 
properties (as a multiple of 12 month trailing cash fow) and the willingness 
of lenders to allow reasonable leverage to those prospective buyers who wish 
to fund their acquisitions with a combination of debt and equity.

There won't really be a "market price" for stations until credit at 
reasonable terms is readily available.

Today, you're hard pressed to find a lender that will lend at more than 3 
times historical 12 month cash flow.  That creates an inability to invest in 
a stick, buy a station at more than 6x trailing cash flow (assuming you are 
willing to raise half the money from outside investors), or make any 
substantive investments in people since any hiccup in revenues would push 
you out of compliance with your lender.

The low-interest rate environment doesn't help if you can't borrow at a 
reasonable (4-5x) multiple of EBITDA.

The operators best positioned to take advantage of this environment are 
those who own their facilities debt-free and are able to use the free cash 
from their operations to invest in internet initiatives and talented 
broadcasters and management personnel.  Though not many are left, having 
cashed out in the first round of consolidation (1996-2000).


----- Original Message ----- 
From: "Mark Laurence" <marklaurence@mac.com>
To: "Howard Glazer" <hmglaz@worldnet.att.net>
Cc: "BostonRadio Mailing List" 
Sent: Saturday, January 03, 2009 10:44 AM
Subject: Re: WBZ cuts Leveille, Cuddy, Dyett, poss. Desmarais

> On Jan 2, 2009, at 10:09 PM, Howard Glazer wrote:
>> If the selling prices dip low enough, I'd expect the stations  unloaded 
>> by
>> the big corporate chains to go to the bottom-feeder chains rather than
>> mom-and-pop local ownership, with programming being dollar-a-holler 
>> religion
>> or ethnic. It would be odd to hear that kind of programming on FM, 
>> that's
>> for sure, but if there's nobody out there interested in doing "real
>> radio" -- or advertising on it -- what else could the future be?
> There's no evidence that radio has lost its value for advertisers or 
> listeners.  Cume ratings are almost as strong as ever.  Quarter-hour 
> numbers are down but nowhere near as much as the audience for  newspapers, 
> local TV news, or network prime time.  I think people who  would buy FM's 
> and a huge AM like WBZ would take advantage of these  audiences with good 
> proven programming and some innovations.  The  bottom feeders gravitate 
> toward weak AM signals and daytimers.
> We're likely to see bankruptcies for the penny-stock, debt-laden 
> corporations that gobbled up local radio in the 90's.  With lower  prices 
> and new lending policies, the new owners won't be spending  half their 
> cash flow on debt service, and they'll have something left  over for a 
> programming budget.
> Newspapers can be resurrected too with lower sales prices and 
> bankruptcies for the high-debt chains.  Even with circulation losses,  50 
> million papers a day are sold in the US, over a half million  between the 
> Globe and the Herald.  With less debt and a clean slate,  there will be 
> room for new publishers, just like there was room in  the 1980's for USA 
> Today to rise to the top out of nowhere. 

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