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Entercom-CBS Radio Merger Dominates 1Q Broadcast Deals

U.S. broadcast station mergers and acquisitions (M&A) volume reached $2.76 billion in the first quarter of 2017, according to analysis by Kagan, a media research group within S&P Global Market Intelligence. Radio deals accounted for $2.59 billion, with $2.50 billion from just one deal.

On February 2, Entercom Communications Corp. and CBS Radio Inc. announced a Reverse Morris Trust tax-free transaction valued at $2.86 billion, in which CBS Corp. would spin off its radio unit. At a 7.0x forward seller’s multiple, the 29 AM and 88 FM stations account for $2.50 billion, making this the largest radio transaction since 2006.

The remaining $92.9 million was paid for 61 AM stations, 60 FM stations and 44 low-power stations. The largest deal following the Entercom/CBS merger was Starboard Media Foundation’s acquisition of Immaculate Heart Radio. The religious radio operator assumed an undisclosed amount of debt (estimated at $30.0 million) of Immaculate Heart’s owner IHR Educational Broadcasting.

In the only other transaction exceeding $10 million, Beasley Broadcast Group reduced its debt by $11.0 million, selling five FMs, one AM and four translators in the Greenville-New Bern-Jacksonville, N.C., market to Curtis Media Group Inc. and its unit CMG Coastal Carolina LLC.

The quiet period on TV deals has been lifted and the TV market registered an M&A volume of $167.3 million in the first quarter. The first large TV deal of 2017 was Gray Television Inc.’s acquisition of the market leaders in Gainesville, Fla. (ABC affil WCJB) and Bangor, Maine (CBS affil WABI). Gray paid $85.0 million (8.2x forward seller’s cash flow) to Diversified Broadcasting Inc. and Community Broadcasting Service (which holds the license for WABI).

The only other large TV transaction was announced by Meredith Corp., paying $70.0 million to Time Warner Inc. for the license of Indie WPCH-TV in the Atlanta, Ga. market. Meredith has been operating the station under joint sales and joint services agreements for six years. This was the largest single-station TV deal since 2015.

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