While the stock market is booming, as evidenced by the Dow tickling the lofty 12,000 level this week, the valuations for broadcast properties continue to lag, according to a new report from the media investment banking firm MC Alcamo & Co. Effective at the close of trading on Dec. 31, six pureplay broadcasters, including Belo and Gray Television, were valued at an average 8.7 times multiple--20% down from the 10.7 multiple they registered a year ago, and 10% down from just three months ago.
Media companies with varied holdings, including stations and other media assets, traded at an average 6.1 times multiple, down close to 25% from a year ago.
"Investors remain cautious about broadcast--despite rising profitability, improved credit profiles, a good outlook for 2011, an exceptional outlook for 2012, and audience trends all pointed in the right direction," said MC Alcamo President Michael Alcamo.
Alcamo said the sector appears to be undervalued by about 15%, making it a savvy buy for investors.
"In view of technical advances in master control, rising levels of retransmission revenue, and a resilient advertiser proposition from the high definition consumer experience, we believe that broadcasters will increasingly be seen as strong cash-producing firms," he said. "The political season brought margin expansion and improved cash positions, and broadcasters go into 2011 in a position of strength. As investors take notice of the coming political season in 2012, we expect share prices to revert upward."