The six pure-play, publicly owned broadcasters were valued
by the investment bank M.C. Alcamo & Co. at an average multiple of 10.7 X
EBITDA at the close of 2009, while 14 listed firms with broadcast divisions
came in at 10.3 X. Tops among the pure-plays is Fisher at 14.07 X, ahead of
Nexstar (11.16) and LIN (10.78).
Highest among the media companies with broadcast divisions
are Entravision (12.11 X), ahead of Scripps (10.10) and Media General (8.82).
M.C. Alcamo President Michael Alcamo said the numbers are
encouraging for broadcasters as they crawl out of a long economic malaise. "The robust multiple
indicates significant confidence among investors--confidence in continued stock
price appreciation and an anticipation of rising profitability throughout
2010-11," he said. "Investors are willing to pay nearly eleven times EBITDA for
companies that are well-positioned to benefit from advertising growth in the
recovery."
Broadcast groups compare favorably to blue-chip non-media
concerns, Alcamo
added, such as Dell Corp. with an 8.5 X multiple, and McDonald's at 10.3 X.
While local broadcasters' stock prices have been a source of
grave concern for years, the average stock price of the six pure-plays came in
at an encouraging 73% of their 52-week range, Alcamo reported. "As the S&P's upward momentum continues, we
expect broadcast stocks to continue to recover, and then to meet and exceed
their 52-week range," read the report. "The trading data reflect continuing
market confidence in broadcast media. Moreover, we expect revenue and profits
to continue to surprise investors throughout 2010."
The
firm also forecasted some M&A action in the local TV space. "We see 2010 as
an optimal time to bring station assets to market," said Alcamo. "Capital gain tax rates are likely to
rise; station revenue and BCF will be up; and numerous well-capitalized,
strategic purchasers are eager to grow through acquisition."
