Could Radio Station Values Collapse?

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This topic contains 2 replies, has 3 voices, and was last updated by  Bill Recto 10 months, 4 weeks ago.

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    With both iHeart (formerly Clear Channel) and Cumulus both on the verge of possible bankruptcies (and perhaps even Chapter 7 in the case of at least one of these companies, which would force liquidations and possible “fire sales” of stations), I’m beginning to think that the values of radio stations are about to plunge.

    How much??

    I think that should both iHeart and Cumulus go bankrupt, and if at least one of them goes Chapter 7, it’s possible that except for either (1) A 50,000-watt AM station with a signal that (both day and night) covers a large area, or, (b) A Class B/C FM station in a top-20 (or even top-10) market, no single radio station will be able to net it’s owner(s) more than $1 million (and even these types of stations might go for no more than $2-$3 million each in a top market).

    My thinking about this stems from the fact that bankruptcies of iHeart and/or Cumulus could result in hundreds of radio stations going up for sale at once (especially if both go bankrupt within a few weeks of each other), which could drive down the values (and sale prices) way down since there may not be as many buyers available to purchase these stations.

    In fact, I feel that if the proposed CBS Radio/Entercom merger isn’t completed soon (before a potential bankruptcy of either iheart and/or Cumulus), it could come completely undone given that the CBS Radio properties would not be anywhere worth nearly as much as they are now. At the very least, it would reduce the amount of money that CBS could get for these stations and possibly even cancel the acquisition.

    Let’s assume that both iHeart and Cumulus go bankrupt, and as a result, there are hundreds of radio stations suddenly up for sale, with the price driven way down. Who might be buyers??

    (1) Religious broadcasters. If the values of stations plunge, many religious broadcasters could be in a position to buy-up many stations. As an example, EMF could rapidly expand it’s nationwide “K-Love” and “Air 1” networks to a lot more markets.

    (2) CBS/Entercom: If Cumulus or iHeart bankruptcies bring hundreds of stations onto the market, and station values plunge, and if the CBS/Entercom deal doesn’t get undone by all of this, the combined concern could buy a lot more stations in a number of cities for a relatively small price. They could even become the biggest station owner.

    (3) Noncommercial/Public Broadcasters: Station values could plunge to the extent that noncommercial broadcasters could expand their portfolios of stations for much less than they would have dreamed. This might allow well-funded NPR member stations to expand to multiple stations in their markets with multiple formats (i.e. 24/7 news/information, 24/7 classical, 24/7 jazz). But the future of Federal funding for NPR could “put the kibosh” on some noncommercial stations’ dreams for expansion, even if sale prices for commercial stations plunge.

    (4) Smaller groups: The Beasleys (and their ilk) might be able to expand for a reasonable amount of money.

    (5) “Mom and Pop” or “One-Man” Operators: If radio station values plunge to the extent I think they would if both Cumulus and iHeart go bankrupt, many stations in smaller and medium markets (or even larger market stations with smaller signal areas) could end-up in the hands of “Mom and Pop” operators or “One-Man Bands” (for the latter, think Bob Bittner of WJIB-740 in the Boston area and several stations in Maine), who might suddenly find an affordable way to get into station ownership and operation. They may care enough about their communities to perhaps serve their communities better than an iHeart or a Cumulus.


    One Other Issue: Should hundreds of radio stations suddenly go up for sale at once, it’s also quite possible that at least some iHeart and Cumulus stations go go off the air entirely if they don’t get sold.

    It could be an interesting year or two in the industry.



    With the recent FCC Main Studio ruling could iHeart just sell many of their local studio properties and keep those stations on the air programmed from one remote studio?  I can’t help but see a connection there – the FCC made a ruling that will help keep stations on the air, even though they are no longer locally programmed.


    Bill Recto
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