Monday, May 15, 2017

Chicago Radio: WGN Radio Valued at $52M

Sinclair Broadcasting’s buyout of Tribune Media for $3.9 billion would make the combined company the largest owner of local TV stations in the U.S. Sinclair currently owns 172 TV stations, while Tribune owns 42 local TV stations in 33 markets—and iconic 50,000-watt news/talk WGN 720 AM.

Despite the gargantuan deal, the $43.50-per-share deal for Tribune by Sinclair is actually valued on the lower end of recent TV station deals at 7.5X 2017-18 average cash flow on the seller’s side and 7.0X on the buyer’s side. That’s according to an evaluation from Kagan, a media research group within S&P Global Market. This is based on company guidance of $650 million in 2017-18 average pro forma EBITDA, including expected synergies.

InsideRadio is reporting that Kagan deems Sinclair’s 7.5X cash flow multiple at the “lower end” of recent TV deals. By comparison, radio sale multiples are currently about two times lower than television, on average, as TV sees an upward trend, says Larry Patrick, president of brokerage Larry Patrick Communications. A large market AM like WGN, however, draws multiples of 7.0X to 7.5X, Patrick tells Inside Radio. Kagan values WGN Radio at $52 million.

Of the top 10 TV station deals in history, this ranks sixth overall and second since the Great Recession behind Nexstar’s $4.6 billion deal for Media General in January 2016, Kagan reports.

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