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Just when radio appeared to be regaining a little respect (at least in the financial community) – on St. Patrick’s Day the US House voted to de-fund National Public Radio.
Chris Ensley at Investment Banking firm Coady Diemar Partners says the deal market could be loosening up in general – “with banks lending on attractive terms for larger station groups, we believe it is mostly a matter of time before lending on attractive terms trickles down to smaller entities.”
In “Radio M&A Roars Back to Life” Ensley writes that the industry has “been waiting for the last two years for a bellwether transaction that would help redefine” current trading market multiples. Ensley’s analysis suggests that recent deals involving Hubbard/Bonneville, Cumulus/CMP and Cumulus/Citadel “firmly establish multiples in the 8x-9x range.” One could argue that in truth the major market properties involved were assigned the highest multiples for valuation purposes.
Both trading and financial markets instinctively embrace signs of stability. So, these three deals are valuable in terms of providing a real-time empirical basis for reasonable valuation assumptions.
Total cost of Citadel/CMS acquisition - $3.14B – Crestview Partners - $500m – 2.6b in debt?
Recall that unable to service $2.5 in debt, Citadel filed for bankruptcy protection in December of 2009.
Management at both Citadel and Cumulus embarked upon aggressive operating cost cutting initiatives to compensate for shrinking advertising revenues. It would appear that the merged entity will have to rely heavily upon organic sales growth (and perhaps some divestitures) as opposed to further cost containment in order to effectively deleverage. “Scale” alone might not be enough of a catalyst given the glut of competitive marketing platforms.
Which gets us back to Click and Clack.
In his clever rant during the NPR de-funding debate, NY Rep Anthony Weiner mocked Republicans for ignoring issues a whole lot more important to this country than National Public Radio. Weiner’s clever stand-up belittled the importance of radio in general as it pertains to vital community service. Our preeminent NPR affiliates here in Baltimore (WTMD and WYPR) provide exemplary service to their Baltimore area advocates.
If Cumulus is ultimately proven successful with its consolidation/economies of scale business model, management would do well to follow the NPR community service example. In fact, radio operators everywhere should follow NPR’s lead – in most markets this is a beloved brand, irrespective of politics.
Chris Ensley at Investment Banking firm Coady Diemar Partners says the deal market could be loosening up in general – “with banks lending on attractive terms for larger station groups, we believe it is mostly a matter of time before lending on attractive terms trickles down to smaller entities.”
In “Radio M&A Roars Back to Life” Ensley writes that the industry has “been waiting for the last two years for a bellwether transaction that would help redefine” current trading market multiples. Ensley’s analysis suggests that recent deals involving Hubbard/Bonneville, Cumulus/CMP and Cumulus/Citadel “firmly establish multiples in the 8x-9x range.” One could argue that in truth the major market properties involved were assigned the highest multiples for valuation purposes.
Both trading and financial markets instinctively embrace signs of stability. So, these three deals are valuable in terms of providing a real-time empirical basis for reasonable valuation assumptions.
Total cost of Citadel/CMS acquisition - $3.14B – Crestview Partners - $500m – 2.6b in debt?
Recall that unable to service $2.5 in debt, Citadel filed for bankruptcy protection in December of 2009.
Management at both Citadel and Cumulus embarked upon aggressive operating cost cutting initiatives to compensate for shrinking advertising revenues. It would appear that the merged entity will have to rely heavily upon organic sales growth (and perhaps some divestitures) as opposed to further cost containment in order to effectively deleverage. “Scale” alone might not be enough of a catalyst given the glut of competitive marketing platforms.
Which gets us back to Click and Clack.
In his clever rant during the NPR de-funding debate, NY Rep Anthony Weiner mocked Republicans for ignoring issues a whole lot more important to this country than National Public Radio. Weiner’s clever stand-up belittled the importance of radio in general as it pertains to vital community service. Our preeminent NPR affiliates here in Baltimore (WTMD and WYPR) provide exemplary service to their Baltimore area advocates.
If Cumulus is ultimately proven successful with its consolidation/economies of scale business model, management would do well to follow the NPR community service example. In fact, radio operators everywhere should follow NPR’s lead – in most markets this is a beloved brand, irrespective of politics.
