Q2 broadcast M&A market stalled due to COVID-19 crisis

Rhea-AI Summary

In Q2 2020, U.S. broadcast station M&A volume reached $90.9 million, marking the sector's lowest quarterly activity since 1983. The deal market faced a significant downturn due to the COVID-19 crisis, with the largest deal, valued at $49 million, occurring on April 3. Notably, transactions diminished in quantity, with only a handful exceeding $1 million. The radio market reported minimal activity, with expectations of increased exits among small station owners amid ongoing challenges. A recovery in larger transactions is anticipated post-November 2020 elections.

Positive

• Acquisition by Mission Broadcasting for $49 million accounts for 53.9% of Q2 M&A volume.
• Several small transactions indicate continued market activity despite low overall volume.

Negative

• Q2 2020 broadcast M&A volume is the lowest in 37 years.
• The radio market experienced minimal activity with only four transactions exceeding $1 million.
• Expectations of small radio station owners exiting the market due to current challenges.

MONTEREY, Calif., July 6, 2020 /PRNewswire/ -- U.S. broadcast station mergers and acquisitions (M&A) volume reached a total of $90.9 million in the second quarter of 2020 as tracked by Kagan, a media research group within S&P Global Market Intelligence. This constitutes the sector's lowest quarterly deal volume in Kagan's records, which go back 37 years to 1983.

While first quarter results were largely unaffected by the current crises caused by the COVID-19 outbreak, the deal market all but collapsed in April.

The last large deal was announced on April 3. Mission Broadcasting Inc. agreed to acquire three digital TV stations from Marshall Broadcasting Group Inc. for $49 million, to be applied against Marshall's existing loans payable to Mission. Mission Broadcasting then entered shared services agreements with Nexstar Media Group for all three stations.

This transaction, negotiated largely before the COVID-19 outbreak, accounts for more than half (53.9%) of the second quarter's total U.S. broadcast M&A volume.

On May 28, four companies, fully or partially owned by Mr. George S. Flinn, Jr., announced the sales of their six TV stations to Radiant Life Ministries, Faith Community Television and Memphis Educational Television for a total of $5.7 million. On the same day, Gray Television reported the acquisition of two low-power TV stations in Alaska for $1.5 million.

On June 26, Sinclair Television Group Inc. announced the $8.5 million acquisition of two Class-A TV stations in the Washington, D.C., market from WMTM LLC, a unit of Loop Media Inc.

Those were the only noteworthy TV transactions in the second quarter. We do not expect the TV M&A market to pick up again with large transactions until after the November 2020 elections.

The radio market had even less to report. In a forgiveness of about $3.0 million in debt, three FM stations in or near the St. Louis, Mo., market were transferred from Mr. Dennis Wallace to East Central Broadcasting LLC.

Only four other transactions exceeded $1 million each.

In the Philadelphia market, VP Broadcasting announced the acquisition of an AM station with an FM translator from Aztec Capital Partners for $1.5 million.

In the small La Crosse, Wis., market, an AM/FM combo is being sold from Mississippi Valley Broadcasters LLC to Magnum Communications Inc. for $1.4 million.

A similar $1.4 million will be paid for a Crooksville, Ohio, FM station, sold by Y Bridge Broadcasting Inc. to AVC Communications Multimedia Group LLC.

A non-rated AM/FM combo with two FM translators in non-rated Washington, Ind., is going to be sold from DLC Media Inc. to Shake Broadcasting LLC for $1.35 million.

There were another 88 radio transactions in the second quarter, but none of them exceeded a million dollars and more than three quarters of them (67) took place in small markets and non-rated areas. Depending on the duration of the current situation, we expect a growing number of small radio station owners to exit the business, but we also expect a swift return to larger transactions once the crisis is resolved.

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Media Contact
Amanda Oey
S&P Global Market Intelligence
+1 212-438-1904
amanda.oey@spglobal.com

 

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SOURCE S&P Global Market Intelligence

FAQ

What was the total M&A volume for U.S. broadcast stations in Q2 2020?

The total M&A volume for U.S. broadcast stations in Q2 2020 was $90.9 million.

How did COVID-19 impact the broadcast M&A market in Q2 2020?

The COVID-19 crisis caused a significant downturn in the broadcast M&A market, leading to the lowest quarterly deal volume in Kagan's records.

What was the largest M&A deal in the broadcast sector during Q2 2020?

The largest deal was Mission Broadcasting's acquisition of three digital TV stations for $49 million.

When is a recovery expected for the broadcast M&A market?

A recovery in larger transactions is anticipated after the November 2020 elections.

What challenges are small radio station owners facing?

Small radio station owners are expected to exit the market due to ongoing challenges from the COVID-19 crisis.