With a number of station groups on the market, Belo President Dunia Shive says it may consider buying as long as the deal is accretive and wouldn’t “increase debt or leverage significantly.” Shive voiced what’s likely a universal viewpoint in the sector: “It will be interesting to see valuations.”
Add Belo Corp. to the list of potential buyers of stations currently on the market.
During this morning’s second-quarter earnings conference call, Dunia Shive, president-CEO of Belo, confirmed what many had suspected.
Responding to a question from Wells Fargo Securities analyst Marci Ryvicker, Shive said: “It would have to be something that fits the profile of the group … and most important it has to be accretive in order to benefit shareholders.”
Underscoring that, Shive later said that Belo “wouldn’t be interested in anything that would increase debt or leverage significantly.”
Like other station groups that emerged from the recent recession without resorting to Chapter 11 bankruptcy reorganization, Belo has worked hard to shore up its balance sheet. While its debt remains substantial — $887 million — its leverage ratio stands at 3.7 times.
Noting that there are a number of properties for sale, Shive voiced what’s likely a universal viewpoint in the sector: “It will be interesting to see valuations.”
She also said she expects some properties to fetch premiums over current public market multiples. However, because there have been no substantive deals to set the bar, projecting just what specific stations or station groups will fetch is chancy.
Many in the financial sector still see a substantive gap between bid and ask.
When Ed Attorino of Benchmark Capital asked, then answered, his own question about Belo’s interest in the McGraw-Hill station group, saying, “You probably won’t comment,” Shive confirmed that she would not.
Those familiar with broadcast M&A see the McGraw-Hill stations — three are in top 30 markets — as a potentially good fit for Belo.
Like other station groups reporting second-quarter results in recent days, Belo sees the important automotive advertising category improving in the second half of the year as Japanese car makers, particularly Toyota, recover from the devastating earthquake and tsunami earlier this year.
Belo executives cautioned that third-quarter total revenues are likely to be down mid-single digits, and Shive noted that Belo stations in its larger markets were registering slightly weaker performance than those in smaller markets.