Radio Dealmaking Remains Slow, But Don’t Blame High Interest Rates.
This article first appeared on www.insideradio.com
These aren’t exactly boom times for mergers and acquisitions in radio, but Tideline Partners Founder Greg Guy isn’t sitting on his hands.
“The market for deal announcements is slow overall, however we remain very busy,” he tells Inside Radio. “A shallow pool of buyers creates a market where things can move quickly if the right buyer is interested, but if a seller turns them away, stations can remain on the market for a while. We are starting to see more desirable assets coming to market. Dominant stations in good markets priced appropriately can still move quickly.”
The lack of activity, however, isn’t uniquely a problem for radio. Recent data from S&P Global Market Intelligence shows there’s M&A weakness across North American media and telecom, with companies in that space reaching 96 M&A transactions in February. Those deals were worth about $160 million in combined transaction value.
That was the sector’s weakest performance since January 2023, when there were 142 deals worth a combined $65.7 million — down significantly from the $1.84 billion generated from 98 transactions in January.
There are varying perspectives on what might serve as a catalyst for radio M&A.
“The largest potential catalyst for deal flow in radio would be further ownership deregulation, particularly in unrated markets,” Guy says. “It does not appear likely in the near term, but it is sorely needed, not just for M&A activity, but for the industry overall.”
Dick Foreman, Founder and CEO of Stamford, CT-based RAFAMEDIA, says some operators might need to sell to gain liquidity, with some long-term owners simply looking to cash out. And Bob Heymann, Managing Director of Media Services Group, says it’s a simple matter of financial results. “I sincerely believe the greatest factor for more activity would be if somehow the radio industry could show increased top line revenue growth.”
All three media brokers interviewed by Inside Radio agreed on this much: high interest rates, while hardly ideal, aren’t the problem. “Interest rate declines would help the market incrementally,” Guy says. “While high interest rates create headwinds, they are not currently the biggest impediment to station-trading activity.”
Says Foreman: “Rates are not the problem. After all, if you look at today’s rates — 7% or so — [it’s] really much cheaper than early Eighties, with coupons of 9% and higher.”
Religious-oriented broadcasters — regional and local — have formed the backbone of radio dealmaking in recent years, a trend that Guy believes is likely to continue. But what happens when that activity eases?
“There will be much fewer transactions for naked sticks (buying a station solely for its FCC license, with ‘stick’ meaning tower),” Heymann predicts. “The majority of the activity will shift back to cash-flowing stations and clusters.”
At the upcoming NAB Show in Las Vegas, Foreman says he’s looking for more digital activity as base linear activity fades. “Those operators who have embraced the digital spectrum are having remarkable success — small dollar numbers, but [they’re] gaining real strength by making market inroads.”
As for Guy, who recently launched a new firm, it’s a chance to sit down with clients to talk about opportunities in the marketplace. “The market remains slow overall, but the lack of transactions has created a window for creative broadcasters. The NAB is always an interesting time to zoom out from the day to day of transactions and find new opportunities for my clients.”
As for Heymann, he will moderate an April 15 panel discussion called “M&A’s Outlook on TV/Radio — a Look at the M&A Landscape and How to Prepare for Buying and Selling’s Impact.” – Sean McDevitt