In spite of the current regulatory climate, radio station sales have been on a quick pace. Between the years 2002-2005, around 7% of radio stations have changed ownership each year according to Kagan research.
Both TV and Radio stations are hoping that there will be regulatory relief that could initiate more consolidation in the industry and make things more efficient and increase the stock prices. If there is no regulatory letup, consolidation will continue at a slow pace.
Clear Channel Communications as of 1996 had only 39 radio stations, and now has grown to 1,187 stations at the end of 2005, becoming the leader of the industry. The total licensed full-power stations in the U.S. are 13,748 as of March, 31 of this year.
Kagan analyst Michael Buckley said, "The top 10 operators went from owning 4% of radio stations in 1996 to 22% by 2005, with so many small operators still running stations, further consolidation is possible and, according to some executives, highly desirable. But even if that were to occur, the radio industry would not be nearly as concentrated as other media sectors such as movie theaters, where one company alone—Regal Cinemas—owns 18% of all U.S. screens."
Buckley added: "Overall, 774 radio stations switched hands in 2005 at a cash flow multiple slightly lower than the 13.7x multiple of the prior year. Wall Street, however, remains concerned about the industry's slow top line revenue growth and has pushed public trading multiples down to just 9.2x."
As in all media properties, radio broadcasting is coming under increasing pressure. While in 2005 they posted $20 billion in sales, the extremely low forecast for this year are already being refigured to an even lower number. For the next few years, it is forecast that growth will eventually settle to a 3% yearly average.
Comment Preview