Industry Update
Broadcast Industry
Table of Contents
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Industry Overview ... 3
Key Indicators ... 4
M&A Overview ... 5
Public Market Data
1... 8
About MPI ... 10
Industry Overview
This publication focuses on major events, developments and trends within three segments of the
Broadcast Industry: radio broadcasting, television broadcasting and cable programming. Each of the
Broadcast Industry segments is dominated by a few sizable players, and most firms operating in the
Broadcast Industry are in the mature stage of their business lifecycle. The Broadcast Industry faces the
primary challenge of limited advertising dollars, which is a key driver to revenues, and has resulted in
significant consolidation among industry participants in recent periods. Other important trends and
challenges are discussed below:
• Radio Broadcasting: This segment includes broadcasting stations, networks and syndicates that
broadcast audio programming through AM, FM and satellite radio channels. Radio suffered greatly
following the 2009 recession as advertising budgets were slashed and the remaining advertising dollars
were largely allocated to television and internet-related marketing efforts. Overall, Radio is struggling to
remain relevant in the face of competition from digital media (such as online radio) and satellite radio.
• Television Broadcasting: This segment consists of companies operating studios and facilities that
program and deliver over-the-air transmission of audiovisual content to the public. TV broadcasting has
contended with increased competition for viewing audiences and advertising dollars from online channels
and a shift in consumer preferences to cable services. TV broadcasters have begun to demand
retransmission fees from cable companies for the right to retransmit television broadcast programming.
Retransmission fees will continue to represent an important revenue source going forward.
• Cable Programming: This segment consists of studios and facilities that distribute television programs
through cable systems on a subscription or fee basis. This segment has experienced a widened selection
of channel offerings, which resulted in an increase in the number of consumers willing to pay for
upgrades to existing cable subscriptions in recent years. Despite the recent growth experienced by cable
programmers, the industry faces an evolving source of competition from the Internet.
As the stock price performance graph below suggests, the Broadcast Industry as a whole has outpaced
the S&P 500 over the last two years. In particular, the television broadcasting segment has led the
charge and continues to outpace other subsectors and the S&P, despite significant volatility during 2014.
-‐100% 0% 100% 200% 300% 400% 500%
Quarterly Benchmark Performance*
Key Indicators
Sources: S&P Capital IQ, Bloomberg, IBISWorld.
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2.90
2.92
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US Travel Statistics
Total Vehicle Miles (Trillions of Miles) World Price of Crude Oil ($ per barrel)
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Advertising Expenditures
Total Avertising Expenditures ($Billion)
80.00
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105.00
110.00
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Broadband Connections vs. Cable TV Subscriptions
M&A Overview
Highlighted Transactions
TV Broadcaster Media General Buys LIN Media
• Media General, a broadcaster in Richmond, Va., that sold its
newspapers to bet fully on the future of broadcast television,
agreed Friday, March 21, 2014 to purchase competitor LIN Media
and its 43 stations. This transaction closed on December 19, 2014.
• Upon completion of the deal, Media General will operate a total of
74 TV stations across 46 markets in the U.S. It will reach 26.5
million, or about 23%, of U.S. TV households.
• Enterprise Value: $2.5 billion.
Nexstar Broadcasting Group, Inc. Acquires Klas, LLC and KASW-TV, Inc.
• Nexstar acquired the assets of KASW-TV, the CW affiliate serving
the Phoenix, AZ market for $68.0 million plus working capital
from Meredith Corporation and SagamoreHill of Phoenix, LLC on
October 21, 2014. The acquisition will expand the Company’s
coverage to 57 markets in 22 states.
• Nexstar acquired the assets of KLAS-TV, the CBS affiliate serving
the Las Vegas, Nevada market for $145.0 million plus working
capital from Landmark Media Enterprises, LLC. on November 21,
2014. The acquisition will expand the Company's portfolio to 110
television stations serving 58 markets in 23 states.
M&A Overview, cont.
Industry Trends – Radio
Recent Transactions - Radio
Source: S&P Capital IQ
16.7x 0.0x 0.0x 0.0x 11.6x 11.1x 0.0x 32.3x 0.0x 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x 35.0x 2006 2007 2008 2009 2010 2011 2012 2013 2014
Radio Subsector -‐ Median M&A EBITDA Multiples
Median EBITDA Multiple Overall Median (10.0x)
$41.0 $0.9 $3.9 $0.2 $2.8 $1.5 $0.6 $1.1 $0.5 -‐ 10 20 30 40 50 60 70 80 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 2006 2007 2008 2009 2010 2011 2012 2013 2014
Radio Subsector -‐ M&A Activity (Announced Transactions)
Volume ($bn) Deal Count
Announced Date
12/7/2014 Entercom Radio, LLC Lincoln Financial Media Company
Lincoln Financial Media Company operates radio stations in the United States. 12/22/2014 Alpha Media LLC Access.1 Communications
Corp.-‐NY., Nine Radio Stations in Shreveport and Tyler-‐ Longview
Access.1 Communications Corp.-‐NY., Nine Radio Stations in Shreveport and Tyler-‐ Longview comprises radio stations located in the United States.
11/13/2014 Hubbard Broadcasting, Inc. Omni Broadcasting Company Omni Broadcasting Company owns and operates radio broadcasting stations in Northern and Central Minnesota.
Radio Subsector
M&A Overview, cont.
Industry Trends – Television & Cable
Recent Transactions – Television & Cable
Source: S&P Capital IQ
Announced Date
12/10/2014 Liberty Global plc; Searchlight Capital Partners
Puerto Rico Cable Acquisition Company, Inc.
Puerto Rico Cable Acquisition Company, Inc., doing business as Choice Cable TV, offers cable television and cable modem services to Aguadilla, Mayaguez, San German, and surrounding communities in Puerto Rico. Puerto Rico Cable Acquisition Company, Inc. was formerly known as Centennial Puerto Rico Cable TV Corp. The company is based in Ponce, Puerto Rico. Puerto Rico Cable Acquisition Company, Inc. is a former subsidiary of Centennial Communications Corp.
11/21/2014 Nexstar Broadcasting Group, Inc.
Klas, LLC Klas, LLC operates as a VHF television station in Nevada. 10/21/2014 Nexstar Broadcasting Group,
Inc.
KASW-‐TV, Inc. KASW-‐TV, Inc. operates television broadcasting station.
2/1/2014 Media General, Inc. LIN Media LLC LIN Media LLC, together with its subsidiaries, operates as a local multimedia company in the United States. This transaction closed on December 19, 2014.
Television and Cable Subsectors
Buyer Target Target Description
$17.5 $8.2 $4.7 $37.5 $1.9 $1.4 $5.7 $69.9 $146.3 -‐ 5 10 15 20 25 30 35 40 45 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0 2006 2007 2008 2009 2010 2011 2012 2013 2014
TV and Cable Subsector -‐ M&A Activity (Announced Transactions)
Volume ($bn) Deal Count
12.5x 27.1x 0.0x 9.5x 7.9x 41.5x 15.4x 9.8x 8.9x 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x 35.0x 40.0x 45.0x 2006 2007 2008 2009 2010 2011 2012 2013 2014
TV and Cable Subsector -‐ Median M&A EBITDA Multiples
Public Market Data
1
Guideline 12/31/2014 Enterprise
Ticker Close (2) High Low Value (EV)(3) LTM NFY LTM NFY LTM NFY EBITDA EPS Radio Broadcasting
Beasley Broadcast Group Inc. BBGI 5.11 9.61 4.50 204 7.4x NA 26.5% NA 12.1x NA NA NA Cumulus Media Inc. CMLS 4.23 8.19 2.88 3,489 12.5x 10.3x 23.1% 26.8% 6.2x 33.7x (0.2%) 33.2% Emmis Communications Corp. EMMS 1.87 3.67 1.66 395 11.9x NA 15.0% NA 2.0x NA NA NA Entercom Communications Corp. ETM 12.16 12.77 7.86 941 10.0x 9.4x 24.9% 26.2% 18.7x 17.3x (2.8%) 1.5% Radio One Inc. ROIA.K 1.67 5.82 1.35 1,055 8.6x NA 27.5% NA -‐1.2x NA NA NA Saga Communications Inc. SGA 43.48 55.00 33.58 266 8.1x NA 24.9% NA 18.5x NA NA (14.0%) Salem Communications Corp. SALM 7.82 11.00 5.04 484 10.0x 9.6x 18.5% 18.8% NM 22.0x 1.5% 25.9% Spanish Broadcasting System Inc. SBSA 2.90 7.46 1.99 400 10.6x NA 25.6% NA -‐0.2x NA NA NA
Median 10.0x 9.6x 24.9% 26.2% 6.2x NM -‐0.2% 13.7%
TV Broadcasting
Gray Television Inc. GTN 11.20 14.98 7.16 1,882 13.4x 9.8x 33.1% 38.1% 29.8x 13.5x 21.5% 18.9% Tribune Media Company TRCO 59.77 89.99 55.40 8,577 19.2x 14.3x 26.4% 32.6% 0.8x 27.5x (14.6%) NA Media General, Inc. MEG 16.73 23.97 12.45 3,061 17.9x 9.9x 30.0% 47.2% NM 30.6x NM NM Nexstar Broadcasting Group, Inc. NXST 51.79 55.93 32.20 2,623 13.1x 11.6x 34.6% 36.1% NM 26.7x 30.4% 61.2% Sinclair Broadcast Group, Inc. SBGI 27.36 37.50 23.88 6,282 10.5x 8.6x 33.6% 37.0% 21.9x 13.3x 24.8% 54.4%
Median 13.4x 9.9x 33.1% 37.0% 21.9x 26.7x 23.2% 54.4%
Consensus Growth(4)
Company
52-‐Week EV/EBITDA EBITDA Margin Market Cap/Earnings
10.3x 10.4x 8.9x 8.2x 8.9x 10.0x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x 18.0x 20.0x 2009 2010 2011 2012 2013 2014
Median EBITDA Multiples -‐ Radio
Average of Medians (9.4X)
11.2x 8.1x 7.5x 7.1x 12.7x 13.4x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x 18.0x 20.0x 2009 2010 2011 2012 2013 2014
Median EBITDA Multiples -‐ Television
Public Market Data, cont
Guideline 12/31/2014 Enterprise
Ticker Close (2) High Low Value (EV)(3) LTM NFY LTM NFY LTM NFY EBITDA EPS Cable TV
AMC Networks Inc. AMCX 63.77 78.39 52.73 7,129 11.3x 11.3x 31.4% 29.2% 21.0x 17.9x 21.2% 22.8% Corus Entertainment Inc. CJR.B 22.95 26.05 20.08 2,861 9.9x 9.5x 34.8% 35.5% 13.1x 12.3x 3.6% 5.3% Crown Media Holdings Inc. CRWN 3.54 3.98 2.80 1,617 5.4x NA 75.3% NA NM NA NA 15.3% Discovery Communications, Inc. DISC.A 34.45 45.13 31.29 30,317 12.2x 12.2x 40.6% 39.4% 19.4x 19.7x 4.4% 15.5% Scripps Networks Interactive, Inc. SNI 75.27 86.62 71.06 11,941 10.5x 10.4x 42.8% 42.9% 19.8x 18.8x 5.4% 12.0% Viacom, Inc. VIAB 75.25 89.76 65.86 42,806 9.9x 9.7x 31.5% 31.0% NM 13.2x 2.9% 9.8%
Median 10.2x 10.4x 37.7% 35.5% 19.6x 17.9x 4.4% 13.7%
Consensus Growth(4)
Company
52-‐Week EV/EBITDA EBITDA Margin Market Cap/Earnings
9.8x 9.9x 8.1x 9.2x 12.1x 10.2x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x 18.0x 20.0x 2009 2010 2011 2012 2013 2014
Median EBITDA Multiples -‐ Cable
About MPI
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