Thursday, 6 July 2017

Radio Station selling for $82.8 MILLION!

Value of a

 radio station

(0ver $80 million?) 

I've often been asked about radio station prices, and how much various particular radio stations are worth.  This is one of the most difficult questions in radio, it depends on so many variables, but the most influential factors are 

  •  how desirable is it?
  •  how successful is it?

While the desirability depends on how well it is performing, there are many people who regard owning a radio station as an extension of their personality or other business, almost as a vanity exercise.  This has been boosted by the dearth of available radio licences. In most parts of the world the number of radio licences is limited due to spectrum congestion. The number of available frequencies (or slots of the dial) is limited by nature.  And a lack of any commodity leads invariably to higher prices. 

The second valuation measuring tool is much easier to quantify. Like most other businesses,  it is usually a multiple of profits, or of forward cash flow.  That is usually a factor of a radio station's ratings - obviously the more listeners a radio statin has, the more 'pairs of ears' it has for rent to advertisers (which is what the commercial radio business really is - the wholesale rental of pairs of ears)!

Many radio stations can and do charge more for advertising, due to the type (or demographic) of the listener they attract. A radio station with mainly business news can charge much more for its advertising time than a station playing Top 40 music for kids, just as the Wall Street Journal or the Financial Times is more expensive than the Daily Mirror, etc.  This is due to the perceived value of the listeners, and their spending power.  Listeners with low disposable nincome are simply  not of much interest to most advertisers. 

Los Angeles is one of the largest radio markets in the world, in terms of the amount of money spent on radio, although it's not even the largest in the USA.  Imagine a radio station with so few listeners,. that it  isnt even in the top 10 most listened to stations in its area.  

KPWR-FM in Los Angeles, better known to its listeners as Power 106, pulls less than 3% of the area's listeners and its not even the top station in its field - Hip Hop.  It's part of the EMMIS group of radio stations.  They have just announced that they have done a deal to sell the station for $82.8 million!  

That easilly makes it the biggest sale so far this year (in fact the price is over a third the total prices paid for the total of ALL the radio stations   sold o in the last quarter ($245m).  Indeed, its the highest price paid for any single radio station in the last five years! 

The buyers of KPWR-FM   (Power 106) are Merulo Media, who operate other radio and TV stations, including KWHY (MundoFOX) and Super 22.  It's run by Alex Merulo and the sale is awaiting FCC approval. 

(If you want a media property valuing, whether as a group or as a single station,  please do enquire, in the strictest confidence,  to me at this email address).

Radio Market - Los Angeles  to 12 June 2017   Click Here.

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