"Minnesota-based Hubbard Broadcasting is purchasing half of Bonneville’s radio markets in a deal that could indicate how smaller groups expand intelligently now that the economy is nudging its way back. Bonneville revealed this week that it is selling its radio properties in Chicago, St. Louis, Washington, DC, and Cincinnati to Hubbard for $505 million. Hubbard, which has owned KSTP (AM) in the Twin Cities (Arbitron market # 16) since 1923, has only two other radio properties, both also in that market. It has a full complement of TV stations.
Bonneville will retain its radio stations in Phoenix, Los Angeles, Seattle and Salt Lake City as well as KSL-TV there. Hubbard hasn’t owned radio stations outside the Twin Cities since it sold KOB (AM/FM), Albuquerque, to Citadel several years ago.
Why The Deal Makes Sense
Many industry eyeballs will be watching for details on this transaction, which is the first major radio deal of 2011.
Radio station trading has been at a virtual standstill for at least three years, as any starving broker can tell you. One big question, of course, has been when the ice will break, especially in large and major markets. The other key question has been: What will the multiples be? Radio & Television Business Report says that in this transaction it may be eight times broadcast cash flow, which is what most buyers and sellers are talking about these days.
Hubbard runs a high-class, very professional operation which has always been smart with its money. The President of another major market group told me: “Hubbard, like Bonneville, is an excellent broadcaster with strong ties to their community. Their attention to ‘localism’ including live, local talent is very good for radio and bodes well for its future. I hope this becomes a trend as opposed to the cookie cutter, cost efficient models that have been adopted by many of our country’s largest radio media companies.”
Hubbard wasn’t a player in the last big wave of radio consolidation because it was starting up a satellite TV business, which later sold to Direct TV in a deal valued at $1.6 billion. So there was plenty of cash for this deal. Hubbard is also a mature operation, which is reflected in the stations it’s buying. Several are either at or near the top of their market rankings. They’re all competitive. This was no pig-in-a-poke numbers grab.Read more here.
A major reason why this deal makes sense is that Hubbard is buying proven assets all the way through. Reportedly, there are no significant changes planned for any of the stations. Bonneville’s top radio hands are going along with the deal, too. CEO Bruce Reese and COO Drew Horowitz and their staff will soon be drawing their paychecks from Hubbard Radio."
DOUG McLEOD has been a leader in radio station management, sales and as an on-air talent for over 30 years. His experience includes all levels of the radio station management and selling process-from product creation and street-level selling to strategic marketing and sales management to business ownership. Doug's new book "THE ZERO TURNOVER SALES FORCE: How To Maximize Revenue By Keeping Your Sales Force Intact" was published in hard cover by AMACOM, the publishing arm of The American Management Association, in April, 2010.
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