Station Trading Market Sluggish In 1Q

TV station merger and acquisition volume hit $37.1 million in the first quarter of 2015, according to data released today by SNL Kagan. The TV deal total for all of 2014 was $7.3 billion.

The analysis said the market is taking a break after the historically high volumes of the last two years, a period when transactions that would otherwise have taken place between 2009 and 2012 finally got done thanks to the improved financial environment and the increased need for scale in the TV station business.

Looking forward, SNL Kagan said, despite no lack of companies still interested in expanding their broadcast portfolios, volume could remain at lower levels in 2015. Working against the M&A market are the uncertainties surrounding the pending FCC incentive auction and its tantalizing potential for huge payouts to TV-station owners.

Cash flow multiples for TV stations have been hovering around 8.0x for the last two-and-a-half years — levels that are now considered the norm, as opposed to the historical double-digit multiples of the late 1990s and early aughts. These have been driven on the TV-station side by potential near-term increases in retransmission revenues, leading to higher buyers’ multiples.

The first notable TV deal of the year took place in February, when Ion Media Networks sold two stations in St. Louis (WRBU) and Columbia, S.C. (WZRB), to Northwest Broadcasting for a total of $6 million.

That transaction was topped in size by the $17.5 million sale of KMVT-KSVT Twin Falls, Idaho, from Neuhoff Communications to Gray Television. Due to the low-power status of KSVT, the two stations constitute a legal CBS/Fox duopoly, which explains the 10.0x cash flow multiple — the first double-digit multiple for a TV deal since September 2013.