The chatter among brokers for much of the year has been that dealmakers have mostly been sitting on the sidelines, hoping for the Federal Communications Commission to loosen local ownership caps to stimulate the soft deal market. New third quarter numbers from Kagan suggest that is indeed the case with the lowest quarterly deal volume in more than three years.
U.S. broadcast station sales volume reached a total of only $215.1 million in third quarter 2019, as tracked by Kagan, for the lowest quarterly deal volume since fourth quarter 2016.
In the radio business, the biggest deal of the quarter took place in New York, where Emmis partnered with investment firm Standard General to form a new public company, Mediaco Holding, which will own and operate Emmis urban AC WBLS-FM and rhythmic CHR “Hot 97” WQHT-FM. In a deal that has yet to close, Standard General will pay $91.5 million in cash and a $5 million note to Emmis, while Emmis will have a 23.7% minority stake in the new company. The pending New York sale is part of a years-long series of radio sell-offs by Emmis, which has cashed out of the Los Angeles, St. Louis and Terre Haute, IN markets.
The second-largest deal was Stephens Media Group's purchase of Mapleton Communications, a transaction that will double Stephens’ size. The deal, which suggests Jim Shea’s California-based Mapleton is exiting radio, will see Mapleton hand over 29 FM and eight AM stations, together with assorted boosters and translators, to Oklahoma-based Stephens Media Group for $21.0 million. Mapleton earlier signed paperwork on a $400,000 deal to sell three Chico, CA stations to Bustos Media, leaving it only with ethnic KSFN (1510) San Francisco.
Another $16.9 million was added to the radio deal volume through the sale of 12 AM stations and seven FM translators from Salem Media Group to Starboard Media Foundation, the parent company of Immaculate Heart Media. The deal was announced in two parts, with four AM stations and three translators in Miami and Tampa sold for $8.2 million in July, followed by eight AM stations and four translators in St. Louis and Youngstown, OH for $8.7 million in August. The second leg of the deal marked Salem’s exit from the St. Louis and Youngstown markets.
In the TV sector, the only major deal of the quarter was the announced sale of KMBH-DT in Harlingen, TX from MBTV Texas Valley to Entravision Communications for $2.9 million.
Waiting On FCC
Some would-be radio station sellers have been holding off, waiting to see how the FCC would rule on potential changes to its media ownership rules. But that process suffered a major setback last week with a federal appeals court decision that invalidated some minor relaxation of media ownership rules made by the Commission nearly two years ago. The FCC has said it will appeal the decision. But the ruling puts the media ownership issue in limbo, meaning any deregulation to stimulate the deal market is likely a long way’s off.
Prior to last week’s court decision, brokers had predicted the deal-making pace wouldn’t significantly change until the FCC made a decision one way or another on adjusting local radio ownership limits. “People are waiting, watching, hoping for deregulation,” Elliot Evers, Managing Director at MVP Capital, told Inside Radio in May. “There are a lot of prospective sellers, not really a lot of active sellers, who are sitting on the sidelines wondering what’s going to happen with deregulation. If we do see sweeping deregulation, which is very much an open question, I think that will bring a good number of prospective sellers to market.”