Television stations are hot properties again.At a time when most of the communications industry is busy preparing for an uncertain future in a 500-channel universe, TV station sales are on the rise. “Everybody is feeling the worst is behind us. There is a lot of pent-up demand for stations that did not trade because multiples were so low,” said Mike Finkelstein, chief executive officer of Renaissance Communications, which recently completed a successful initial public offering. TV stations trade on multiples of cash flow. In the boom days of the mid-80s, stations were trading at 10 to 12 times cash flow. After the bottom fell out of the economy, trading fell to as low as seven to eight times cash flow. Now values are picking up again,with some stations going at nine to 10 times cash flow. Among broadcasters doing deals or looking to do deals are Clear Channel Television, Ellis Communications, River City Broadcasting, Fox Broadcasting, Tribune Broadcasting and Belo Broadcasting, which recently bought CBS affil WWL-TV New Orleans for $ 110 million. Even more interesting is that many of these groups are looking at CBS, NBC and ABC affiliates. Affiliate hunting River City Broadcasting has always gone after Fox affils and traditional indies. Now the group owner is said to be eying the Cook Inlet’s ABC affil WTNH-TV in New Haven, Conn.; and NBC affil WSMV-TV in Nashville, Tenn., the 24th and 33rd markets. River City topper Barry Baker declined comment, but the group owner has been in a buying mode for some time. Those stations together may fetch more than $ 100 mil. Clear Channel Television, up until now an owner of only Fox affils, has also been looking at Big Three stations. The group owner has most recently been linked with Nationwide Communications, which owns ABC affils WBAY-TV, Green Bay, Wis.; WRIC-TV, Richmond, Va.; and WATE-TV, Knoxville, Tenn. The three stations’ worth has been estimated at over $ 100 million. Another former indie operator gone network affil is Bert Ellis. The onetime head of Act III Broadcasting, which owns several Fox affils, went on a $ 140 million spending spree, buying six TV stations in midsize markets including Knoxville and Nashville. Helping to drive the renewed interest in TV stations is an improved economy. Total TV advertising grew by 4% in 1993 over 1992, according to the Television Bureau of Advertising, with Big Three network advertising up 13% in the fourth quarter. “The advertising outlook is improved,” said Paine Webber analyst Alan Gottesman. Indeed, with bankers somewhat turned off to the cable industry because of all the rate regulation, broadcasters may once again appear to be a safe bet to lend to. The regulatory climate for broadcasters is also improving. The financial interest and syndication rules, which limit the amount of programming ABC, NBC and CBS can own, are on the way out. The primetime access rule may also be on the way out. That reg forbids network affils in top 50 markets from buying off-network programming, making them slaves to expensive firstrun syndication product. If that rule is lifted, network affils will have more programming options and be in a better bargaining position. The FCC is also expected to review rules limiting the number of TV stations a company can own (currently 12 or 25% reach of the country) and rules prohibiting ownership of two TV stations in one market. On the indie station front, Paramount’s and Warner Bros.’ decision to launch new networks has made those operators highly sought after. An affiliation with a new network means programming costs will drop.
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