Valuing Radio and
Cable TV Businesses
WILLIAM R. RICE ROBERT C. SCHLEGEL JOHN J. KOTLARCZYK
Radio and cable properties operate in related industries, but are quite different when it comes to economic threats and opportunities. Following the enactment of the Federal Telecommunications Act on February 8, 1996, nearly all industries relating to communications media have enjoyed solid revenue growth and increased value, as exchange prices in relation to earnings have generally increased. Television broadcasting, filmed entertainment, and the various traditional publishing sectors (newspaper, books, magazines) have also enjoyed this growth, but in business valuation assignments, it is more likely that a broker or an appraiser will be dealing with radio or cable properties, because they are more numerous, of smaller size, and more entrepreneurial in management style than many other media properties.
In the late 1990s, advertiser spending within the U.S. communications industries was expected to grow at an annual compounded rate of 6.9 percent.1 Importantly, cable TV has somewhat undermined network TV as a competitor for local advertising. This trend has had a positive effect on radio station properties since the advertising customer may perceive that radio time is a better buy for the advertising dollar spent. Considering just radio and cable properties and what advertisers spend, however, Table 26.1 shows the significant growth expectations of these two related industries.
Keep in mind that technological convergence and regulatory changes have “superheated” the market, triggering a wave of consolidation in radio and cable properties, and certainly threatening such a