Report: Digity Could Make Waves as IPO, Merger Candidate

As Digity LLC aggressively rolls up radio stations nationwide, industry observers are broadcasting the media company's attractiveness as either a merger or initial public offering candidate, according to thedeal.com.

West Palm Beach, Fla.-based Digity, founded by long-time broadcast veteran and now CEO, Dean Goodman, is a diversified media company known for its radio stations across the country, including parts of Florida, California, South Carolina and Texas.

"Dean has been very adept and creative," said Bill Fanning, managing director with investment bank Media Venture Partners LLC, pointing to the company's acquisition strategy.

Starting with its consolidation of the West Palm Beach market, Digity has been actively rolling up assets, he explained.

Digity, with $5 million in financial help from West Hartford, Conn., private equity firm Balance Point Capital Partners LP, agreed in May to purchase Three Eagle Communications Inc., an operator of 48 radio stations throughout Iowa, Minnesota, Nebraska and South Dakota.

That deal came just eight months after Digity agreed to pick up NextMedia Group LLC, which has 33 radio stations in eight markets, including Chicago, Milwaukee, Myrtle Beach, S.C., and North Dallas, Texas. Once the Three Eagle Communications deal receives regulatory approval, Digity will own 113 radio stations.

Media Venture Partners' Fanning pointed out that public companies in the radio space have been "opportunistic" lately -- CBS Radio Inc.'s acquisition of a New York radio station from Merlin Media LLC for $75 million in 2012 is one example -- and wouldn't be interested in picking up Digity as a whole. Still, he said, Digity could pursue additional acquisitions and then either go public or do a merger of equals.

Alpha Media, for instance, could emerge as a good fit for Digity, Fanning said. Alpha likely has a similar cash flow to Digity, he said, noting that the Portland, Ore., company has been "pretty actively aggregating properties and gaining scale."

Alpha closed its merger with L&L Broadcasting LLC in July. Alpha, known as Alpha Broadcasting LLC prior to the merger, operated six stations, while L&L, also based in Portland, operated 43 stations in seven markets.

A merger between Alpha and Digity would be good for both companies, said Ed Seeger, president of media brokerage firm Seeger Media LLC, adding that the pair could also look to take the combined company public.

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