FAIR MARKET VALUE REPORT
VALUATION OF PERFORMING COMMERCIAL STATIONS
Radio stations are almost always valued through a method called a Fair Market Valuation, or FMV.
This process allows for recognition of the unique features of the broadcast industry:
- Value based on the number of people (POPS) covered by the station's signal, using a standard multiple
- Value based on the station's operating income (EBITDA or BCF) or cash flow, using a standard multiple
- Value based on the station's gross revenue (seldom used today)
If a station is "sufficiently" profitable, the valuation is usually based on a multiple of its operating income, or as it is sometimes called, BCF (Broadcast Cash Flow) (Modified EBITDA).
If a station does not produce positive operating income, it is usually valued on a POPS, or persons covered basis, using a standard contour and per POP multiple. This is called a “Stick Value” report.
Our Basic Valuation reports look at all available metrics.
For stations with adequate positive cash flow, the best and most accurate Fair Market Value (FMV) is determined by using a combination of industry accepted methods:
• Comparable Station Sales
• Multiple of Current Operating Income (Cash Flow)
• Multiple of Gross Revenue
• Population Covered by Station Contour (POPS)
DATA COLLECTION PROCESS
We review all radio station transfer applications filed at the FCC. From that data we segregate the filings into eight regions and also into five categories all on a monthly basis.
The categories are FM standalone, AM and Translator combinations, AM Standalone, Translator standalone and Non-Commercial (NCE) FM stations.
This gives us very current and accurate picture of radio transactions. We have all of that information on a monthly/yearly basis for five years. We provide that report monthly, on a subscription basis to industry subscribers.
All of our comparable sales studies are derived from actual regional station sales during a multi-year period in regional markets with similar characteristics. This gives a more accurate comparison than national numbers. The report is prepared on a "rolling twelve month basis".
The normal fee for this report is $1,250, but can vary with the complexity of the assignment. Additional stations are $250 each. The report can typically be delivered in one week.
Fair Market Value (FMV) is generally defined as the cash, or cash equivalent, price for which a property would change hands between a willing buyer and a willing seller in an arms length transaction, both being adequately informed of the relevant facts, and neither being compelled to buy or sell In the absence of an actual sale, FMV may be estimated using industry accepted guidelines.
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