While broadcast station advertising revenue has rebounded from its double-digit lows in the midst of economic shutdowns in 2020 at the beginning of the COVID-19 outbreak, the deal market has still been near historical lows. However, year-end numbers for 2021 are higher than in 2020 giving reason for some cautious optimism.
The total deal volume for 2021 amounted to $4.72 billion. 92.6% ($4.20 billion) of the total came from the two top-deals of the year, Gray Television, Inc.’s acquisitions of Meredith Corporation and Quincy Media, Inc. and the spin-offs following those purchases.
In February, Gray paid $925.0 million for Quincy’s 26 TV and two radio stations. In April, Gray sold ten full power and three low power stations from the Quincy acquisition to Allen Media Group LLC, a unit of Entertainment Studios, Inc. for $380.0 million.
A month later, the Quincy acquisition was dwarfed by a new $2.825 billion deal. In May, Gray announced the acquisition of Meredith Corporation and its sixteen full power and 30 low power TV stations. In July, Gray spun off Meredith’s WJRT-TV to Allen Media for $70.0 million.
Without Gray’s activities, the 2021 TV deal volume would have been $334.0 million – less than half of 2020’s TV deal volume ($793.8 million). Top of the rest was Weigel Broadcasting Co.’s purchase of PMCM TV, LLC’s New York station WJLP (coming with a low power translator). The transaction was filed with the FCC in October for $62.5 million.
There were seven more full power TV station deals with price tags between $11.4 million and $31.2 million and nine full power station sales in the $1.0 million to $10.0 million range. In total, 77 full power stations were sold in 2021, which is only half of the number of full power stations sold in 2020 (145).
On the upside, the average price for full power stations ($58.2 million) was the highest since 2014 and the average cash flow multiple rose from 8.5 in 2019 and 2020 to 8.7 in 2021.
The radio deal volume stands for a mere four percent of the total. 2021’s $190.2 million represent the lowest radio deal volume in our records, dating back 40 years to 1982.
The four largest radio station deals were driven by three of America’s top-ten TV station owners. In June, Sinclair Broadcast Group, Inc. announced the sale of its only radio stations to Lotus Communications Corp for $18.06 million.
The other three deals all happened in December, giving rise to a slightly more optimistic outlook for 2022. In two transactions, The Walt Disney Company received a total of $24.25 million for its remaining radio stations. VCY America, Inc. is going to pay $9.25 million for KESN-FM in the Dallas-Ft. Worth market and Good Karma Broadcasting, LLC will pay $15.0 million for Disney’s AM stations in New York, Los Angeles and Chicago and for an LMA for WEPN-FM, owned by Emmis Communications.
For the third year in a row, the average cash flow multiple for radio transactions remained stable at 6.6x forward buyers BCF. In our estimates, only 25 full power radio stations were sold based on their cash flow. That is, however, five stations more than in 2020.