A year out of bankruptcy, the 10-station group is financially healthy and the new owners believe it's a good time to sell, what with a record year for political advertising expected in 2012. Observers say the group could fetch eight times blended 2011-12 cash flow or as much as $350 million.
For Sale: Young Broadcasting For Just $350M
Young Broadcasting’s 10-station group is being quietly offered for sale for as much as $350 million, multiple sources tell TVNewsCheck.
A year out of bankruptcy, the station group is widely viewed as financially healthy. The proposed sale appears timed to capitalize on what many anticipate will be a record year for political advertising in 2012.
Young’s asking price represents a multiple of roughly eight times blended projected 2011-12 cash flow, according to several sources familiar with the situation.
One of those sources said Young is looking at 2011 cash flow in the low- to mid-$30 millions range.
An Allen & Co. consultant who participated in the company’s Chapter 11 bankruptcy restructuring estimated 2012 cash flow of $50 million, a number significantly bolstered by political advertising.
Based on those projections, Young’s 8x multiple translates into an asking price of somewhere between roughly $325 million and $350 million.
“They’re going to try to blend a projected 2012 politically enhanced number,” one source said. “You can’t change the multiple in this environment. You can try to change the cash flow either by running stations better or using a projected number. They’re going to try to get you to pay on 2012.”
Tony Cassara, who was recently named CEO of Young, declined to comment.
The lack of a bar-setting transaction in the broadcast television market could be an impediment to a deal. Those familiar with the broadcast TV deal market say multiples of 8-9 times 2011-12 blended cash flow would be reasonable for stations that are ranked first or second in healthy markets.
However, one source said the growing reverse compensation trend in which the Big 4 networks want an increasingly bigger piece of affiliates’ retransmission revenue could affect the price. “Everybody’s scared about what the networks are going to take,” the source said.
Young emerged from Chapter 11 bankruptcy reorganization about a year ago with its $830 million in debt reduced to $360 million. After two attempts to sell Young’s assets at auction in 2009 failed, senior creditors purchased the company for $220 million.
Young’s key shareholders include: Standard General with about 25%, Oppenheimer Funds with roughly 20%, Credit Suisse with roughly 15% and Highland Capital with roughly 12%.
Another big question mark is what Young plans to do with KRON, the then-NBC affiliate in San Francisco (DMA 6) it purchased for a record-setting $823 million in 1999. It was that ill-advised acquisition, the debt Young incurred as part of it and NBC’s dropping its affiliation, that ultimately pushed the group into bankruptcy.
It’s unclear whether Young intends to sell KRON separately or as part of the group.
In addition to KRON, now a news-heavy MNT affiliate, Young’s other stations include WKRN Nashville, Tenn. (ABC, DMA 29); WRIC Richmond-Petersburg, Va. (ABC, DMA 57); WCDC Albany, N.Y. (ABC, DMA 58); WATE Knoxville, Tenn. (ABC, DMA 59); WBAY Green Bay, Wis. (ABC, DMA 71); KWQC Davenport, Iowa-Moline, Ill. (NBC, DMA 99); KPLO Sioux Falls, S.D. (CBS, DMA 112); WLNS Lansing, Mich. (CBS, DMA 115); KLFY Lafayette, La. (CBS, DMA 123); and KCLO Rapid City, S.D. (CBS, DMA 173).