Mid-Year Report: Steady Deal Market, $254M In Transactions.

Story by Inside Radio

Translators may be helping stimulate AM radio deals in 2018, but they’ve yet to make a significant impact on pricing. That’s according to a mid-year analysis by Kagan which says the average price paid for an AM station was largely the same in the first half compared to 2017.

“I had expected an increase in AM prices the moment they had translators and that didn’t happen,” Kagan research analyst Volker Moerbitz tells Inside Radio. “So far there is no statistical difference for AMs selling with a translator compared to those that don’t have one.”

During the past several years the Federal Communication Commission’s moves to help AM stations secure translators, following a 2009 decision allowing such simulcasts, has stimulated the buying and selling of the signals. But Moerbitz said the volume of translator sales has essentially returned to normal levels.

As of early last week there had been 27 single AM station sales and 21 sales of single AM stations with FM translators. Moerbitz notes that AM stations are still selling for less than $1 on a “per pop” price metric—the measurement of how much it cost for each person covered by the signal.

‘Slow But Steady’ 2018

Kagan calculates $254 million of radio transactions were announced during the first half of 2018, including $102.3 million worth of deals announced during the second quarter. The biggest deal in the first half of the year was Hubbard Radio’s $45 million deal in St. Louis to buy rock KSHE (94.7) and modern rock “105.7 The Point” KPNT from Emmis Communications. It was followed by Merlin Media’s sale of its two Chicago stations to Educational Media Foundation and Cumulus Media—which had renegotiated an earlier $50 million deal to acquire both FMs. After that came Townsquare Media’s $17.3 million deal to buy three New Jersey stations from Connoisseur Media.



“There is consolidation going on,” Moerbitz said. “The medium-sized players are still looking at expanding while the big companies have pretty much all run out of money.”

Overall, Moerbitz characterized the 2018 deal market as “slow but steady” with multiples for most FM deals hovering between 6.0- and 6.5-times cash flow. That’s about where it’s been for the past several years. Kagan reports 387 radio deals were announced through last week, including 162 FMs and 95 AMs. In addition, 130 FM translators changed hands.

The average price paid for an FM so far this year is $1.5 million. On a “per pop” basis most deals are around $1, which he explained is also on par with a year ago. “All the low hanging fruit has been picked and the people that are still in the market don’t really want to sell for a six-times multiple,” Moerbitz said. “So anybody who is able to hold on and wait for better times does that. And those that aren’t able to hold on sell for almost panic prices, which mean all the averages go further down.” Meantime the average AM station sale price tag this year is $400,000.

What may help stimulate the sales market is action by the FCC, which is expected to consider relaxing local radio ownership caps as part of the upcoming quadrennial review. The National Association of Broadcasters has proposed that it include eliminating the subcap limits—the rule that caps a company from owning no more than five FMs or AMs in the largest markets. Moerbitz thinks a lot of broadcasters are sitting back and waiting to see what the FCC embraces as part of the quadrennial review before signing any contracts to buy or sell stations. Should the Commission go along with eliminating the AM/FM subcaps, it would result in a decline in the value of AMs, Moerbitz says, with the potential to be a “death blow” for commercial AM radio as companies buy a low-performing FM in order to shift their AM programming over to the FM dial. “That could increase the number of sales although I don’t think it will bring up the prices a lot,” Moerbitz added.

As for the future fate of AM radio, Moerbitz expects more ethnic and religious operators will proliferate the dial. He suggests broadcasters consider donating signals to local high schools to stimulate interest in traditional radio by the next generation of listener.