Station to Station

Emmis, Liberty Stations Get Top Dollar

After three sluggish years, the TV-station market may finally be on the upswing: In the first phase of its plan to exit the TV business, Emmis Communications last week cut deals to unload nine of its 16 stations for $681 million. Also last week, Raycom Media agreed to purchase Liberty Corp. and its 15 stations for $987 million.

Analysts and brokers cheered the strong valuations. The Emmis transactions went for 13-14 times cash flow generated during the previous 12 months, higher than the 11-12 times that Wall Street had predicted. Analysts raised estimates for the total Emmis package to $1.3 billion, up from $1.1 billion.

Emmis sold to established midsize groups looking to expand their geographic footprints:

  • LIN TV will pay $260 million to acquire five stations: WALA and WBPG Mobile, Ala.-Pensacola, Fla.; KRQE Albuquerque, N.M.; WLUK Green Bay, Wis.; and WTHI Terre Haute, Ind.
  • Journal Broadcast will ante up $235 million for WFTX Ft. Myers, Fla., KGUN Tucson, Ariz., and KMTV Omaha, Neb.
  • Gray Television will spend $186 million for WSAZ Huntington/Charleston, W.Va.

“This is a very powerful endorsement for the industry,” says Elliot Evers, a veteran station broker and managing director at Media Venture Partners. Sales slowed in 2002, hurt by a shaky economy and uncertainty over the FCC’s media-ownership rules.

Most recent transactions have been what are referred to as “one-offs,” with broadcasters creating duopolies by purchasing a second station in a market.

Last week’s deals, which still need FCC approval, were a major event. Owners and brokers were elated. “This demonstrates to Wall Street and investors that the value of television is strong,” says station broker Larry Patrick.

Adds Raycom CEO Paul McTear, “A lot of players believe there is still inherent long-term value in broadcast, and that is even without having a firm, clear set of rules.” Indeed, the FCC is working on new ownership rules, but as they now stand, Raycom will need waivers to acquire four Liberty stations in markets where Raycom already owns outlets.


Pressured by Wall Street to focus on either radio or TV, Emmis CEO Jeff Smulyan is opting to return the company to its radio roots.

Its biggest TV stations are still for sale, including WKCF Orlando, Fla., the highest-rated WB affiliate in the country, and strong KOIN Portland, Ore. Insiders say Hearst-Argyle, Viacom, Gannett and Tribune are likely bidders.

The first-round sales are mostly logical choices for the buyers. LIN TV gets a new duopoly in fast-growing Mobile-Pensacola, and the Green Bay and Terre Haute stations will be hubbed out of Indianapolis, resulting in about $1 million in annual savings. “We can put some resources behind these stations and make them even stronger,” says LIN Chairman Gary Chapman.

Journal Broadcast is also entering growth markets in Ft. Myers and Tucson. But the company will likely be forced by FCC rules to sell some of its Omaha radio stations.

Gray’s WSAZ buy raised some eyebrows because of the hefty price. “They bought a mature NBC in a stagnant market,” says one station broker. But the top-rated station boasts 60% profit margins. Even so, Bear Sterns analyst Victor Miller notes, “While that is not atypical for a dominant TV station in a market ranked No. 62 by population, it will be hard to improve.”

Additional reporting by John M. Higgins

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