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The tough economy has brought station sales to a screeching halt, say analysts, and that has kept movement among B&C's annual Top 25 station groups to a minimum.
“There's a stalemate,” says Bruce Northcott, principal at TV research firm Crawford, Johnson & Northcott. “I don't believe that the traditional evaluation process holds at this stage of the game. We'll learn how it's going to be resolved when the market takes over. Right now, buyers are trying to set the market and sellers are trying to set the market, and neither do. The market sets the market.”
Would-be station sellers are holding back—unless forced to sell due to crushing debt—because stations are perceived to be undervalued right now, although whether valuations ever come back to former levels of 12-plus times cash flow remains to be seen. Buyers are interested in picking up stations at bargain-basement prices, but are having difficulty finding banks that will lend to them even if they can convince sellers to sell. And everyone is waiting to see if the market has bottomed out.
“We've been approached by very wealthy individuals who say, 'Tell me when it gets to the bottom. I don't want to buy a station group at eight times cash flow only to see it drop to six or seven,'” says Larry Patrick, president of media investment firm Patrick Communications. “For the moment, the deal market is essentially closed.”
Prior to last September's credit crunch, some deals were still in the works. In December, though, Post-Newsweek's intended purchase of WTVJ Miami from NBC Universal for an estimated $205 million had to be abandoned. In that month, Young Broadcasting, which declared Chapter 11 bankruptcy last year, was forced to take KRON San Francisco off the market because it couldn't find a buyer. Young bought KRON for a record $823 million in 2000; today, it would be lucky to get $50 million for the struggling station, according to Patrick.
Other station groups are struggling to hang on. Tribune and Pappas joined Young in declaring Chapter 11 bankruptcy protection over the past few months, forcing Pappas to sell its stations to cover debt. Multicultural Television Broadcasting put four of its six stations in trust while the company waits to sell them to cover defaulted loans. And other once-strong broadcasters, such as Gannett and Media General, are furloughing employees without pay and laying off workers by the hundreds.
“There will be winners and losers,” Patrick says. “The groups that will win are the ones that invest heavily in local content, including newscasts and Web portals. The ones that lose are the ones that stop their local news, add more infomercials and show no connection to their communities.”
The difficult market is why there's little movement among B&C's Top 25 this year. Most moves were small, although Pappas departed entirely while Spanish-language Liberman Broadcasting joined at No. 25.
The Top 25 station groups in B&C's annual list are ranked according to the percentage of U.S. homes they reach. This potential audience reach is calculated in two ways: by total coverage and by FCC rules. Total coverage assumes the station reaches everyone in the Designated Market Area (DMA). The FCC, meanwhile, discounts by half the reach of UHF stations, those using channels 14 and above.
B&C ranks groups according to the FCC method but also shows total coverage, an increasingly important measurement in a TV landscape where the vast majority of homes get their broadcast programming via cable, satellite or telco. If a group owns more than one station in the market, the additional coverage is not counted.
BIA Financial Network provides the baseline data for this ranking. Each group's list includes wholly owned full-power stations and those run under local marketing or joint sales agreements. Digital subchannels, low-power stations, class A stations, satellite stations, translators and stations with only cable distribution are not counted. Only groups that own three or more stations are included.
1 CBS Corp.
35.48% coverage (FCC)
38.47% coverage (total)
Website: cbslocal.com; www.cbscorporation.com
Sumner M. Redstone Chairman Leslie Moonves President/CEO Tom Kane President/CEO, CBS Television Stations
2 Ion Media Networks
(Private; Citadel Investment Group owns 100% of the company's voting stock)
32.42% coverage (FCC)
63.81% coverage (total)
Brandon Burgess Chairman/CEO, Ion Media Networks
3 Fox Television Stations
(NWS; subsidiary of News Corp.)
31.20% coverage (FCC)
37.22% coverage (total)
K. Rupert MurdochChairman, News Corp.Roger AilesChairman/CEO, Fox News; chairman, Fox Television Stations; chairman, Twentieth TVJack AbernethyCEO, Fox Television Stations
Dennis Swanson President, Fox Television Station Operations
4 NBC Universal GE
(Subsidiary of 80% owner General Electric; 20% owned by Vivendi Universal)
30.33% coverage (FCC)
35.76% coverage (total)
Jeffrey Immelt Chairman/CEO, GE Jeff Zucker President/CEO, NBC Universal John Wallace President, NBC Local Media
5 Tribune Co.
(Private; Tribune Employee Stock Ownership Plan owns 100%; EGI-TRB, an entity run by Sam Zell, invested $315 million in the $8.2 billion buyout, which closed on Dec. 20, 2007. EGI-TRB has a warrant that would allow Zell to purchase 40% of the company's common equity)
27.55% coverage (FCC)
35.48% coverage (total)
Sam Zell Chairman/CEO Randy Michaels COO Ed Wilson Chief revenue officer
6 ABC TV Stations Group
(DIS; subsidiary of Walt Disney Co.)
23.14% coverage (FCC)
23.38% coverage (total)
Robert Iger President/CEO, Disney Walter Liss President, ABC Owned Television Stations
(Owned by an investor group including Madison Dearborn Partners, Providence Equity Partners, Saban Capital Group, Thomas H. Lee Partners and TPG Capital)
22.21% coverage (FCC)
44.02% coverage (total)
Joe Uva CEO Ray Rodriguez President/COO
8 Trinity Broadcasting Network
19.63% coverage (FCC)
39.25% coverage (total)
Paul F. Crouch Chairman and President
9 Gannett Broadcasting
17.17% coverage (FCC)
18.14% coverage (total)
Craig A. Dubow Chairman/President/CEO, Gannett Co. Inc. David Lougee President, Gannett Broadcasting
10 Hearst-Argyle Television
(HTV; 75.8% owned by privately held Hearst Corp.)
14.95% coverage (FCC)
15.85% coverage (total)
Frank A. Bennack Jr. Vice chairman, CEO, Hearst Corp.Victor Ganzi President/CEO, Hearst Corp.; chairman, Hearst-Argyle Television David Barrett President/CEO, Hearst-Argyle Television
11 Belo Corp.
13.25% coverage (FCC)
14.22% coverage (total)
Robert W. Decherd Chairman Dunia Shive President/CEO Peter Diaz Executive VP, television operations
12 Sinclair Broadcast Group
12% coverage (FCC)
21.54% coverage (total)
David D. Smith President/CEO
13 Cox Enterprises
10.10% coverage (FCC)
10.35% coverage (total)
James C. Kennedy Chairman/CEO, Cox Enterprises Sanford Schwarz President, Cox Media Group Bruce R. Baker Executive VP, Cox Television
14 Raycom Media
9.92% coverage (FCC)
12.39% coverage (total)
Paul McTear President/CEO
15 Local TV Holdings
(Private; owned by Oak Hill Capital Partners)
9.59% coverage (FCC)
10.87% coverage (total)
Bobby Lawrence CEO
16 Multicultural Capital Trust
(Private; four stations—KCNS San Francisco, WMFP Boston, WOAC Cleveland and WRAY Raleigh-Durham—are up for sale)
9.05% coverage (FCC)
18.10% coverage (total)
Arthur Liu Founder Lee W. Shubert Trustee
17 Scripps Television Station Group/E.W. Scripps
7.99% coverage (FCC)
10.00% coverage (total)
Kenneth W. Lowe President/CEO
18 LIN TV Corp.
7.56% coverage (FCC)
8.60% coverage (total)
Vince Sadusky President/CEO
19 Post-Newsweek Stations
(WPO; subsidiary of The Washington Post Co.)
7.44% coverage (FCC)
7.44% coverage (total)
Donald E. Graham Chairman/CEO, The Washington Post Co.Alan Frank President/CEO, Post-Newsweek Stations
20 Media General
7.42% coverage (FCC)
8.32% coverage (total)
J. Stewart Bryan III Chairman Marshall N. Morton President/CEO James A. Zimmerman VP, Media General; President, Broadcast Division
21 Meredith Corp.
7.16% coverage (FCC)
9.08% coverage (total)
William T. Kerr Chairman, Meredith Corp.Stephen M. Lacy President/CEO Paul Karpowicz President, Meredith Broadcasting Group
22 Entravision Communications Corp.
6.95% coverage (FCC)
13.48% coverage (total)
Walter F. Ulloa Chairman/CEO Philip C. Wilkinson President/COO
23 Young Broadcasting
5.82% coverage (FCC)
5.86% coverage (total)
Vincent J. Young Chairman/CEO Deborah A. McDermott President
24 Nexstar Broadcasting Group
5.75% coverage (FCC)
8.75% coverage (total)
Perry A. SookChairman/President/CEO
25 Liberman Broadcasting
4.80% coverage (FCC)
9.61% coverage (total)
Jose Liberman Co-founder, President
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