U.S. broadcast station M&A volume reached $4.70 billion in the first quarter of 2016, excluding construction permits (CPs) and partial deals. Almost the entire TV volume of $4.61 billion was attributable to Nexstar Broadcasting Group Inc.'s January 27 definitive agreement to acquire all of Media General Inc.'s assets — a deal which subsequently terminated Media General's pending $3.10 billion merger agreement with Meredith Corp., announced back on September 8.
Nexstar's acquisition, at $4.60 billion the fourth-largest TV deal in U.S. history, accounted for 97% of first quarter TV deal volume. The remaining 3%, or $13.1 million, came from a few small transactions filed before the FCC Incentive Auction quiet period, initiated on January 12. Until the auction runs its course, which could take six to nine months or more, the FCC will not approve any applications for broadcast transactions involving full-power or Class A TV stations.
Radio reached a volume of $89.5 million, representing the lowest quarterly radio deal volume since the first quarter of 2012. However, with CBS Corp.'s announcement, made at the company's March 15 Investor Day, of a possible sale or spinoff of CBS Radio, there has been much speculation as to radio buyers potentially interested in top-market CBS Radio stations.
With the Nexstar/Media General merger remaining the only cash flow transaction in the TV realm, the 8.5x forward buyer's multiple of that transaction is also the quarterly average. The radio market closed the quarter with an average 6.5x multiple — slightly lower than 2015's 6.7x.
The top radio deal of the quarter was the $10.0 million sale of non-commercial KUHA-FM in the Houston-Galveston, Texas, market, followed by another non-commercial transaction, the $8.0 million sale of FM stations KPLI, KPLU, KPLI and KVIX as well as seven translators and one translator construction permit in the Seattle-Tacoma, Wash., market from Pacific Lutheran University Inc. to University of Washington.
In addition, $8.0 million was paid in radio's largest cash flow deal of the quarter. KFWB-FM in Los Angeles was sold by CBS Corp. to Universal Media Access KFWB-AM LLC for an estimated 6.3x forward seller's multiple.
The biggest development in the radio market was a surge of FM translator sales sparked by the FCC's AM Revitalization initiative. This act allows AM licensees to buy or arrange to program an FM translator to rebroadcast an AM station. Translators can be moved up to 250 miles and are permitted to change frequencies as long as these are vacant and do not interfere with other stations.
On January 29, the first AM station filing window opened, and through the end of March a total of 435 applications for modification of FM translators were granted (not counting applications for FM translators transmitting signals of FM stations). Almost three-quarters of these applications (318) require a change of ownership. In 214 cases (121 construction permits and 93 licensed stations), the change of ownership happened immediately after the application was granted. Counting all FM translator sales, 447 FM translators (including 237 construction permits) were sold in the first quarter 2016. For comparison, in all of 2015, 453 FM translators (including 189 CPs) changed hands.