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Find a Radio or TV Station for Sale or LMA

 
 

 

 

 

RadioTVDeals Seller Tools

 

Reading Material: 

Securing Protection for Seller Paper

By Erwin G. Krasnow, John Pelkey and John W. King of Garvey Schubert Barer

 

Seller Financing: The first last resort in a tough sales market

By Erwin G. Krasnow and John Brooks

 

ABCs of LMAs

By Erwin G. Krasnow

 

   

How to Sell a Radio or TV Station

 

 

Sellers must realize that broadcast transactions are a bit more complicated and time consuming than selling a mainstream retail business, for example. The process begins in a similar fashion -- Sellers must prepare due diligence materials, place a value on their property, prepare marketing materials, and begin the search for qualified Buyers with the ability to close.

 

Many times, Sellers will choose to hire a professional to assist them in finding a qualified buyer for their assets.  Brokers who specialize in selling broadcast properties are known as Media Brokers (see information found below - A Media Broker will Smooth the Way).  For more information, you can also go to the Top Ten Reasons to Hire a Media Broker.  A complete list of Media Brokers can be found in the RadioTVDeals Media Broker Directory.

 

Sellers also have the option of selling their properties directly, and RadioTVDeals can also assist them in their efforts.  Information about services offered to direct Sellers can be found on the top navigation bar of  RadioTVDeals.com, the nation's largest marketplace for stations for sale.

 

Once a qualified buyer is found, both parties begin contract negotiations. Because the sale includes the transfer of a federally regulated license (or licenses), the proposed transaction will have to be approved by the Federal Communications Commission (FCC). Therefore, when the Buyer and Seller have a signed purchase agreement in place, the Seller (or Seller's FCC Attorney) must complete and file FCC Form 314, Application for Consent to Assignment of Broadcast Construction Permit or License.  Once the application is formally accepted, it goes on public notice for 30 days. If there are no petitions to deny filed, and no further issues arise in the following 30 days, the FCC will more than likely grant the parties final consent so that a closing can transpire. Closings can take place at local abstract and/or lawyers’ offices with one or both parties present. Also, closings can be conducted by phone between FCC attorneys using fax and/or internet.

 

 

 

Preparation of Due Diligence Materials

 

The Buyer’s due diligence requirements will usually include the following documentation: financials (include the last 2-3 years), real estate, major equipment list (complete with year, make and model), current leases, programming contracts, inventory, employees/titles/salaries, music libraries, copies of licenses, engineering for potential upgrades, media kits, list of advertisers, and more.  Click on this link to see a sample checklist for Sellers, Seller Checklist.

 

Sellers must make sure that their operation is in complete FCC compliance before the process begins. This means that public files must be up to date, EAS systems must be operational with appropriate record-keeping in place, hiring practices must meet all regulations, and, the station(s) signal(s) and equipment must operate in total compliance.

 

It is recommended that Sellers hire a broadcast engineer who specializes in all areas of FCC compliance.  RadioTVDeals has provided a directory of engineers and engineering companies to assist you in due diligence preparation. Please click on Engineers located on the second navigation bar in the header of the RadioTVDeals site.

  

 

How to Value a Station

 

Many Sellers continue to value their property based on multiples that were in place in the mid to late 1990’s.  Sadly, these valuations have dropped quite drastically in the past several years. Reality of today’s true economic picture must enter into the mindset of those who are in a divestiture mode.

 

Therefore, the first step when preparing to sell is for the Seller to determine an appropriate and accurate value of the station(s), based on today’s marketplace.  In order to proceed, Seller must have current year-to-date financials, as well as year-end statements from the last two full years (at least) of his or her operation. 

 

In some cases stations are sold based on profit and loss statements provided only by station bookkeepers.  However, this is the exception rather than the rule. Do keep in mind that when the Buyer is attaining financing from a bank, equity or venture capital fund, or any funder for that matter, the Seller must be prepared to provide audited financials prepared by a certified public accountant (CPA).

 

The Seller’s accountant will need to determine the broadcast cash flow (BCF) for the operation. BCF consists of operating income before depreciation and amortization, time brokerage agreement fees, corporate general and administrative expenses and gain or loss on sale of assets. Most of the drivers in the industry place station values based on a specific multiple of the BCF. In the last decade, station multiples have dropped from high teens down to low teens, and many deals are now in the 6-10 multiple range, depending primarily on market size, and/or, more importantly, funder requirements.

 

Next, if real estate is included, the Seller will need to attain real estate appraisals on all property. Other factors that may be considered in the valuation of the station(s) will include the size of the market, total radio dollars available market-wide, market growth, market competition, and the potential for signal upgrade(s).

 

RadioTVDeals can help make the valuation process much easier. Please see our Valuations directory, which can be found in the second navigation bar located in the header of the RadioTVDeals site.  There you will find a number of expert companies who specialize in this field.

 

 

A  Media Broker Will Help Smooth the Way!

 

The most challenging issue for the Seller is the time and effort involved in order to fully market the offering, and to find qualified potential buyers – with “qualified” being the operative word.  Actually, it is quite easy to find interested potential buyers.  However, it is quite another issue altogether to find buyers who have funding already in place, or who can attain appropriate funding in order to complete a transaction.

 

Media Brokers are in business to find qualified buyers of broadcast properties.  Most have extensive databases of potential buyers developed through their years of experience and networking in the industry.  They have a thorough understanding of the entire process, beginning with the preparation of the station presentation book, complete with detailed analysis of current and projected station earnings, to the preparation of the Letter of Intent.  They become a great source of knowledge and experience and can help guide the Seller through the entire process.

 

A Media Broker will allow the Seller to continue focusing on his or her operation during the course of time the station(s) are on the market. Most importantly, Media Brokers are in the business of keeping station information confidential. They understand that in many cases, Sellers do not want employees, advertisers or competitors in their market to find out about their station(s) being on the market. Media Brokers specialize in confidentiality and discretion.

 

A Media Broker can “step in” when the going gets tough -- when there is a breakdown in relations during contract negotiations between the Buyer and Seller.  In many cases, Media Brokers salvage “deals” that would have otherwise gone sour. Yes, a Media Broker will help smooth the way.

 

For more information, you can also go to the Top Ten Reasons to Hire a Media Broker.  For a comprehensive list of available media brokers, please see RadioTVDeals' Media Broker Directory located on the black navigation bar on the site header. 

 

 

FCC Attorney a MUST

 

Usually, broadcast station(s) are sold in an asset sale rather than a stock sale, utilizing a contract often referred to as an Asset Purchase Agreement (APA).  To better represent their interests, Sellers are recommended to hire an attorney or law firm that specializes in communications law. For convenience purposes, the vast majority of FCC attorneys/firms are located in the Washington, D.C. area, with many located in close proximity to Federal Communications Commission headquarters.

 

It is customary that the Buyer’s counsel prepare a draft APA, which is then negotiated between both the Buyer’s and Seller’s attorneys and their respective clients.  Once the contract is finalized, the attorneys will complete and file FCC Form 314.

 

FCC attorneys have a far greater understanding of FCC rules and regulations than mainstream business attorneys, for example. RadioTVDeals has provided a list of FCC attorneys for your convenience. Please go to FCC Attorneys located on the second navigation bar located at the header of the RadioTVDeals.

 

 

FCC Information

 

FCC Form 314 Application

APPLICATION FOR CONSENT TO ASSIGNMENT OF BROADCAST STATION

CONSTRUCTION PERMIT OR LICENSE  --

 

FCC Form 315 Application

APPLICATION FOR CONSENT TO TRANSFER CONTROL OF ENTITY HOLDING

BROADCAST STATION CONSTRUCTION PERMIT OR LICENSE

 

Self-Inspection Checklists:

AM Station

FM Station

TV Station

 

For more details on “How to Sell a Radio or TV Station”, go to the appropriate FCC website address below.

 

Audio Division      http://www.fcc.gov/mb/audio/            Telephone      202-418-2700
Video Division     
http://www.fcc.gov/mb/video/             Telephone      202-418-1600
Policy Division     
http://www.fcc.gov/mb/policy/            Telephone      202-418-2120

 

You can learn how to sell a radio station or how to sell a TV station with RadioTVDeals, the Nation's Largest Marketplace for Stations for Sale.

 

 

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