Anyone with experience valuing broadcast media properties?

A

Anonymous

New member
Joined
Jun 15, 2006
Messages
0
Reaction score
0
Interested especially in TV stations. I’m doing it for the first time here and surprisingly doing alright…but it’s slow going because I have to kind of figure it out on my own. If you’ve got a book or primer you recommend, I’m all ears. If you’re willing to e-mail or chat back and forth, I will name my firstborn after you*.
-supersadface
*I will not actually name my firstborn after you.
 
let us know on your findings or sources. i’m interested to know about as many different types of businesses as possible.
 
i used to valued TV and rADIO. ITS ALL BASED ON PRICE PER POPULATION COVERAGE. HOLLER.
DO YOU WORK IN VALUATION?
 
i used to valued TV and rADIO. ITS ALL BASED ON PRICE PER POPULATION COVERAGE. HOLLER.
DO YOU WORK IN VALUATION?
 
Rasec-
Yes, I work in valuation. And I’m definitely finding what you said to be true about CPP/CPM. I’m working on valuing a small group of stations and slowly but surely getting there. Do you have any industry resources you recommend? Any texts/models/whatevers that I should be looking into? Anything you’d offer would be a huge improvement over my current “try all the wrong methods until I stumble on the right one” method.
Some resources I’ve read suggest using broadcast cash flows as the drivers for your price, which makes perfect sense…unless you don’t have access to audited financial info for the stations. In that case, as you suggested, CPP and CPM seem like good starting points for figuring out a ballpark range on a station.
Thanks for your input. Anything else you can provide would be appreciated - let me know if you’d be open to e-mailing.
-SSF
FrankArabia-
Will do. As noted above, I’m still figuring this out myself. The economics of the industry are pretty cool though, it’s been fun to work on this.
 
Hey man….
Yes, we used a DCF to arrive at broadcast cash flow (operating profit). It was tricky forecasting revenues for TV due to government adversiting during even years. We had a research team that forecasted total market revenues, e.i., in the NY arbitron market.
2) if we were valuing the station as a going concern, we analyzed the revenue share of the station and asked the GM what revenue share the station could achieve. CBS, ABC, FOX, & NBC, lincenses had the highest revenue share for TV - to arrive at revenues for the station.
3) we subtracted any agency cost, film cost, operating expenses (depending on the lincense, market, ect) to arrive at BCF.
Then we worked our way down to net free cash flows.
Check out www.bia.com.
they prepare valuations for radio/TV and produce revenues forecasts (investing in radio or tv).
when looking at COMPS
We looked at high price/revenue, price/to cas multiples for tax purposes. The logic behind this is that an investor will pay a higher multiple for a station he expects to fix up and make more profitable. Ex: if a station caters to the younger crowd - who don’t have enough money to buy, the investor could change the programming to cater to older folks.
Going concern (mature companies).
We looked at really low multiples.
i hope this helps you a little. if you have more questions, let me know.
rasec
 
Rasec-
Thanks for the feedback. Sounds like my methodology isn’t too far off.
A bare-bones overview of the process as I’m finding it:
1) Figure out BCF. Typical station can turn 25% of revenue into BCF, but this number can be as high as 45-55% for fantastic/larger sticks.
2) Figure out the appropriate multiple. Little properties might get something like 6-7x BCF (if the deal is 10m or less, let’s say) and big properties/chains can go as high as 9-12x. The multiples used to be much higher (teens) but have fallen off pretty good in last ten years, from what I see.
Agree with you re: big four networks. Affiliates of Telemundo or whatever just can’t command anywhere near the price that ABC/CBS/NBC/FOX can get.
Coming back to my question from earlier, though - if I don’t have audited financials, what’s the best way to forecast revenues using advertising rates and DMA info? BIA reports will have this stuff, but is there a way to make it from scratch? Boss doesn’t like buying lots of third-party stuff if we can avoid it.
Thanks again, I really appreciate your help.
-SSF
Edit: Yeah, also smoothing BCFs seems to be important if using a simple multiple valuation like I’m doing. As you point out, even-numbered years get a pretty sizable boost from political advertising/Olympics.
 
You must log in or register to reply here.
Back
Top