Report: Station Group Multiples around 10.5 X

"Robust multiple" bodes well for local broadcasters

By Michael Malone -- Broadcasting & Cable, 1/6/2010 4:53:08 PM

The six pure-play, publicly owned broadcasters were valued by the investment bank M.C. Alcamo & Co. at an average multiple of 10.7 X EBITDA at the close of 2009, while 14 listed firms with broadcast divisions came in at 10.3 X. Tops among the pure-plays is Fisher at 14.07 X, ahead of Nexstar (11.16) and LIN (10.78).

Highest among the media companies with broadcast divisions are Entravision (12.11 X), ahead of Scripps (10.10) and Media General (8.82).

M.C. Alcamo President Michael Alcamo said the numbers are encouraging for broadcasters as they crawl out of a long economic malaise. "The robust multiple indicates significant confidence among investors--confidence in continued stock price appreciation and an anticipation of rising profitability throughout 2010-11," he said. "Investors are willing to pay nearly eleven times EBITDA for companies that are well-positioned to benefit from advertising growth in the recovery."

Broadcast groups compare favorably to blue-chip non-media concerns, Alcamo added, such as Dell Corp. with an 8.5 X multiple, and McDonald's at 10.3 X.

While local broadcasters' stock prices have been a source of grave concern for years, the average stock price of the six pure-plays came in at an encouraging 73% of their 52-week range, Alcamo reported. "As the S&P's upward momentum continues, we expect broadcast stocks to continue to recover, and then to meet and exceed their 52-week range," read the report. "The trading data reflect continuing market confidence in broadcast media. Moreover, we expect revenue and profits to continue to surprise investors throughout 2010."

The firm also forecasted some M&A action in the local TV space. "We see 2010 as an optimal time to bring station assets to market," said Alcamo. "Capital gain tax rates are likely to rise; station revenue and BCF will be up; and numerous well-capitalized, strategic purchasers are eager to grow through acquisition."