What Is The Year’s Biggest Radio Deal Netting Entercom? In Terms of Cash, Not Much

The sales price for KSWD/The Sound is in, and it’s an eye-popper — and not in a good way if you’re an iHeart or a Cumulus. Assets just aren’t worth what they used to be…

the-sound-logoBy Paul Marszalek
TheTop22.com

When CBS moved to divest of its radio division via a merger with Entercom, many wondered why they would do that — considering the cash flow it was generating.

One answer seemed to be that CBS feared the possibility of iHeart and/or Cumulus flooding the market with divestitures, driving down the value of radio station assets, and they wanted to get out while the gettin’ was good.

We perhaps got some verification of that today, as the sales price for Entercom’s KSWD/The Sound leaked. The merger requires CBS/Entercom to divest some stations in markets where they are over the ownership cap.

As published in Inside Radio, an Entercom memo stated that the company would net $57.75 million, combined, for the three stations it sold to Educational Media Foundation. Those stations were KSWD/Los Angeles, KSOQ/San Diego, and WGGI/Wilkes-Barre.

At the height of deregulation hysteria, major market radio stations were in the hundreds of millions of dollars, sometimes fetching 20x broadcast cash flow.

And speaking of cash flow, it’s worth noting that by selling to non-profit Educational Media Foundation, the price was not determined by cash flow, but simply by stick value. Further, by settling for a stick value sale, it also suggests that there were few bidders – which runs against radio employees’ fantasies that once prices dropped enough, “real operators” would step in and bring the medium back to glory.

Earlier this year L.A.’s Power 106 sold for $86 million.

A half year later, another L.A. FM sells for what appears to be half that.

Filed Under: Actual NewsFeaturedLinkageNewsRadio and Records

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