Analyst Marci Ryvicker of Wells Fargo sees consolidation in the station business in the future and expects Sinclair Broadcast Group, Tegna and Nexstar doing the buying.
In a note Sunday, Ryvicker said the government was expected to reinstate the UHF discount, relax some local ownership rules and raise the ownership caps. Those changes should lead to what she called “a pretty robust M&A environment."
The environment, at this point, has more buyers than sellers. The only big seller at this point looks like Tribune Media, which has announced it is pursuing strategic options.
The price tag for broadcast assets seems to be between 6-7 times earnings. And the sell sign seems to be 8.5 to 9 times earnings.
Ryvicker says that Sinclair has the most capacity for M&A, followed by Tegna. And she figures as broadcasters buy to get up to the 39% cap, acquisitions will to a large degree be accretive and help generate additional cash flow.
(Photo via 401(K) 2012's Flickr. Image taken on Feb. 21, 2017 and used per Creative Commons 2.0 license. The photo was cropped to fit 9x16 aspect ratio.)