Here's an interesting transaction from AllAccess this morning:
"CBS CORPORATION announced TODAY (12/22) that it has signed a definitive agreement to sell three of its owned radio stations in DENVER, Country KWLI, AC KIMN and Classic Hits KXKL, to WILKS BROADCASTING for $19.5 million in cash.

"This deal marks another step forward in our strategy of exiting mid-size radio markets," said CBS Pres./CEO LES MOONVES. "We believe that focusing on the nation’s largest markets represents the best value for our shareholders, and we will continue working to secure deals at attractive exit values such as this one for our remaining mid-size markets."

WILKS CEO JEFF WILKS said, "We continue to believe in the power and the future of radio, and look forward to adding DENVER to our portfolio of radio broadcast stations. DENVER is the market where I started my career and I’m excited to come back and operate these three leading stations."

DENVER-BOULDER, CO is currently the #21 ARBITRON market with an estimated 12+ population of 2.3 million people, making it WILKS BROADCASTING’s largest market."

3 FMs for less than $20Million total in a market that's comparable in size to Portland!

I wonder if anyone knows what cbs paid for these in the first place?

Here's what Denver stations were selling for in 2002. February, 2002 - Emmis announces sale of Denver radio station KALC-FM ("Alice") to Entercom Communications Corporation (ETM) for $88 million and Denver radio station KXPK-FM ("The Peak") to Entravision Communications Corporation (EVC) for $47.5 million.

>>>>3 FMs for less than $20Million total in a market that's comparable in size to Portland!<<<<

No matter what the spin, that's a firesale.

Denver/Boulder is market 21, slightly bigger than PDX at 23.

Lookin at the 12 + SU 08 Arbs for the three Denver stations sold for $ 19 million, they pan out as follows

KXKL (classic hits) 4.6
KWLI (country) 2.0
KIMN (AC) 2.4

Total 9 ratings points in 12+ ( only demo I have)

Portland CBS now only owns 4 stations
in PDX :

KUPL (Country) 4.3
KINK (Triple A) 4.4
KUFO (Active Rock) 3.6
KCMD -AM (Talk) .6

So if I was deal maker I would offer CBS $20 million for KINK and KUFO and get myself 8 ratings points (4.4 and 3.6), and not bother with KUPL because with KWJJ there will always be strong competition for the country niche.

Now that KLTH is no more, Dennis Constantine doesn't have to program that so I would fire Dave McDonald and make Constantine Gen Manager/Prg Director of the very slim, new Arby Boy radio group of KINK and KUFO. That firing would save me Macdonalds $$ and his assistant's $$.

I would make KINK's MD , assistant PD, of the group and fire KUFO's MD.

I would move KUFO out of First Ave into Jefferson and save a ton of $$$ utilities and rent by having two stations broadcasting out of only Jefferson.

The best sales people of KINK and KUFO would be cherry picked and encouraged to sell both KUFO (males 18-34) and KINK (women 18-34 +) demos out of one building.

Only one hard working motivated promo director plus a cheap assistant would be needed for the 2 stations.

Assuming that in these horrible economic times KINK is making $2.5 million NET profit a year, KUFO is making $ 1.5 million Net a year, adding in my rent,utilities and payroll savings I could pay back all of my $20 million purchase price in under 5 years.

Even at these horrible profits, my sixth year and then every year til hell freezes over, the Arby Boy radio group would put around $4.75 million dollars in the bank, EACH YEAR

Looks like all you need is a good banker and leverage it like everyone else is doing!

I'm not sure leveraged deals are flying right now.

Also, the glaring hole in this scenario is running the same broken business model that is killing the industry. Not sure your sales won't decline. How much are you putting into talent and promotion? Consider not having DC wear two hats, or in this case two ties. GM is a full plate as is PD. One guy wearing both hats and one of those positions will suffer which weakens the whole package. I recommend adding Joe Collins as PD.
I waive my consulting fee for this one time only.

by listening to them, you wouldn't think they were worth too much.

Denver radio revenues are about $80 million a year more than Portland primarily due to sports dollars from the Broncos, Rockies, and Avalanche.

The 19.5 mil price for the Denver stations was shocking but a reflection of their value to CBS in this economy. 92.5 KWLI is a less than perfect Denver signal.

Not a good time to sell. Great time to buy.

Its more about the size of revs than market though an argument that a combination of both is really what is used. In the case of PDX the radio revs were about $132 million or so. Cweaklie was right that Denver is about $80 mill more. CBS doing a fire sale.....big surprise.

The sale price has to do with a station's cash flow, not its ratings. At the peak of the radio sales rush, stations were fetching 12 times trailing cash flow. A station like The Peak in Denver was cash flowing ~$4 million and sold for $47.5 million.

With the economy suffering, it is now a buyer's market. The sale of the Denver CBS stations has reset the values of radio property. The three Denver stations together were probably cash flowing around $3.5 million. The fact that they sold for $19.5m equals somewhere between 6-7 times cash flow. Years ago, the three stations' cash flow would have been higher AND the multiples were higher so they would have fetched a much higher price.

What this sale has done is reset what radio owners can expect if they sell radio stations. It also lets potential buyers know what they can offer for stations. This sale will bring out a lot of the small companies and owners who have been sitting on the sidelines waiting for prices to be more reasonable. This sale is good for radio because the small guys will get back in the game and radio won't have the huge debt loads that stifled the entire industry.

Great time to buy.

Do you know something that we don't? I don't think we're near the bottom.

This sale is good for radio because the small guys will get back in the game and radio won't have the huge debt loads that stifled the entire industry.

Yep. Just say no to any radio corporate bailout.!

Sounds like prices are getting back to reality.

I'd say there are situations where a station is underperforming but has a killer signal and would still make big money on a sale, just based on stick value. Sometimes, it doesn't even have to be that good a signal. The Fish went for $35.8 million as a Class C3 without ever having been on the air!

The C2 for the Fish was in the works before the sale as a C3 and Salem knew that. All that was needed was to get a Yakima station to go directional which they agreed to do, for a price. The proper size transmitter for a C2 was already installed initially.

"Trailing Cash Flow" is the key here. With radio revenues dropping precipiciously, you wind up playing the old wall street game of 'catch a falling knife.' Stations cash flowing 3.5 million this year may only cash flow 3 mil next year, and 2 mil a year or two after that. Suddenly you're back at 16-18 times cash flow.

The economic model for stand-alone radio (absent other media such as internet streams and ad sales, TV, or billboards to combine in a total advertising package) may be near the end of its life expectancy.

Jerry Del Colliano says they may not even get $19 million!

"I don't believe CBS will ever see $19 million for the stations.

The usual repricing will take place based on the latest revenue figures before the deal is approved, financed and closed. And because the first quarter should set a record for declining revenue, Wilks would either be crazy or desperate to buy the trio at December's prices."