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Fisher Casts for Radio-TV Buyers

In a big test of the value of broadcast stations in a bitter financial market, Seattle-based Fisher Communications signaled last week that its 12 TV stations and 29 radio stations are up for sale. Analysts peg the value of those assets at between $800 million and $1 billion.

The company confirmed last week that it has hired investment banker Goldman Sachs to "assist in reviewing its strategic alternatives." Translation: Goldman will seek out buyers willing to meet Fisher's price.

Beyond the confirmation, Fisher executives were not available to discuss the sale or company finances.

Sources say the company has put out feelers over the past six months but hasn't received any offers at prices it felt were high enough. And it may be that Fisher's stations will be sold piecemeal to multiple buyers.

There was speculation last week that ABC would be interested in acquiring Fisher's two biggest stations, ABC affiliates KOMO-TV Seattle and KATU(TV) Portland, Ore., although it's not clear that the network and Fisher could come to terms on price. Disney hasn't bought a TV station in years, and company head Michael Eisner has complained publicly recently that prices are too high.

Wachovia senior analyst Bishop Cheen says Fisher doesn't appear to be under a severe time constraint and may just wait for a better market to sell its top two stations.

"I think now they have made a decision that they want to take profits on the assets," says Cheen. "I'm sure it wasn't a decision that was made or taken lightly."

Others agree, noting that the Fisher family now has several generations who share control of the public company and may now be looking to cash out.

Clear Channel could be a candidate for the radio properties; those stations would complement the Seattle stations it bought from Ackerley Communications last year.

Ironically, it was only within the past half-decade or so that Fisher decided to focus on media as its core business.

Two years ago, it sold the flour-mill business on which the company was founded almost 100 years ago. It has also sold off some real estate holdings in recent years.

The past two years have been particularly difficult for the company. Last year, it defaulted on loans and had to refinance. Revenue is down 8% for the first nine months of the year, to $97.6 million.

In the third quarter, when many broadcasters posted solid gains for the first time in many quarters, Fisher's broadcasting revenue was flat, in part due to the lingering recession in the Northwest.

TV and radio operating cash flow dropped 34%, to $13 million. Earlier this year, the company laid off 185 staffers, or roughly 10% of its workforce. Fisher's long-term debt continues to mount and now stands at $310 million, or an enormous 16 times annualized cash flow.

And there's not a lot of cash on hand to service that debt: The company generated about $12.3 million in operating cash flow in the first nine months of the year. Its net loss stands at $5 million.

But the stock has held up fairly well, trading around $50 a share last Friday, down from a $60 peak in July but a lot better than many other ad-supported companies' this year.

Right now, the market is valuing all of Fisher's media and real estate assets around $800 million.

The company's marquee assets are its ABC TV affiliates and co-owned radio properties in Seattle and Portland, Ore. In Seattle, Fisher operates KOMO-TV as well as news/talker KOMO(AM), talk station KVI(AM) and KPLZ(FM). The Portland properties are KATU-TV, talker KOTK(AM) and KWJJ-FM.

Fisher also owns TV stations in smaller markets in Oregon, Idaho, Washington and Georgia and owns clusters of radio stations in Montana and Washington.

Over the summer, a deal to sell its two Georgia TV stations, Fox affiliates WFXG(TV) Augusta and WXTX(TV) Columbus, fell through.

The company is now negotiating with another party. If that deal goes through, Fisher says it will take a $17 million loss on the properties.