Another Bad Year for Radio Sales; Is Hope Around the Corner?

After examining the totals for 2010 radio station sales, one could become depressed. Like 2009, the total amount spent on acquisitions hovered around $400 million, even with 2010 considered to be a year of some economic recovery. However, the final tally shows there was no real increase in the value of radio station sales even though a slightly higher number of stations sold. So, what’s the outlook for the rest of 2011? Any positive signs? Let’s take a look.

From BIA/Kelsey’s MEDIA Access Pro™ database, we can calculate the past 10 years of radio station sales. The figure below shows both the dollar value of those sales (black columns) and the actual number of stations that were sold (red line).

Outside of 2006, the year Clear Channel announced its privatization, the yearly values of radio station sales hovered around the $2 billion to $5 billion range. In 2008 we saw a noticeable drop in the value of these sales followed by the past two years of really disastrous levels. Clearly, the economic conditions in late 2008, when the financial community was melting down, followed by the deep economic recession through 2009 slowed up the activity of radio station sales.

The most recent year’s disappointing level of radio station sales, even in the face of a recovering national economy, can largely be explained by the lack of available financing. Banks and equity investors were still concerned about the future of the economy and radio stations’ ability to withstand their competition and prosper.

In the first quarter of 2011, the tide seemed to have turned. Economic activity in general has improved, especially with the monthly employment results. Also, recent announcements of radio station acquisitions by Hubbard Broadcasting (of 17 Bonneville stations) and Cumulus Broadcasting (of the entire radio operations of Citadel) has boosted the yearly total of announced radio station sales to 483 stations for $3.7 billion. To see the most recent information, BIA/Kelsey provides a monthly recap and year-to-date totals at http://www.bia.com/Research-and-Forecasts/Broadcast-Media-Resources/Media-Trends/.

Where do station sales go from here? While it is still very difficult to secure enough debt financing for many medium and small market radio deals, the attitude toward radio station acquisitions is slowly turning to the positive. Some of these large deals financing still have to be worked out, but there are encouraging signs they will be. The results from this activity should be some pickup in station sales with the 2011 totals within the range seen in earlier years. And groups that have wanted to reduce or increase their presence in the industry may soon get the chance.

To track the local media industry as a whole, refer to the BIA/Kelsey’s Local Media Index that offers a directional view of how the industry is performing relative to the overall economy. Updated weekly on Thursday mornings, you can view it here: http://www.biakelsey.com/Research-and-Forecasts/Local-Media-Index/