Relaxed Rules, Tax Cuts to Boost Radio Transactions

RADIO ONLINE | Friday, January 19, 2018

BIA Kelsey

According to BIA/Kelsey, there were 755 radio stations sold in 2017 for a total value of over $3.3 billion. That was an increase of 179 outlets over the previous year and the total value of those stations also increased by over $2.8 billion. The increases can be credited to the Entercom acquisition of CBS Radio. In a blog post, Mark Fratrik, chief economist and SVP at BIA/Kelsey said a fact worth noting is that "Entercom was able to finance this transaction and successfully integrate these stations into their operation. It's a very good sign for the local radio industry when business success follows such a major acquisition."

Looking at 2018, Fratrik wrote that there is some optimism that relaxation of rules surrounding local television-radio and local broadcast-local newspaper ownership will lead to an increase in station trading activity. The other key driver for increased activity, he wrote, was the passage of tax reform late in 2017. By lowering the overall corporate tax rate and full expensing of new capital equipment for five years, the values of broadcast properties (much like most other businesses) will most likely increase.

"We have already seen some increases in the values of publicly traded broadcast companies while the negotiations and passing of this legislation was occurring. Of course, it will take some time in the marketplace for these increased values to lead to higher prices for radio and television stations," he added. "At the same time, one cannot overlook the continuing strengthening economy, the record high DOW and how it all affects station transactions."