The year 2020 was a difficult year for the deal market even before the outbreak of the COVID-19 pandemic. Financing had been hard to come by for a number of years, resulting in low cash flow multiples and a shift of focus to smaller stations in small and non-rated markets.
Under these circumstances, a total deal volume of over a billion dollars ($1,007.07 million to be precise) is quite an accomplishment. It is significantly lower than the 2019 volume but still higher than the volume of 2010, when the deal market felt the full impact of the 2008-2010 financial crisis.
The largest transaction of the year took place in September, when E.W. Scripps Co. announced the purchase of all assets of ION Media for $2.65 billion total. For ION’s 71 TV stations, we estimated an 8.7x forward seller’s multiple, which led to a station value of $337.963 million. Another $30 million were added to the deal market in October, when 23 if the ION stations were spun off to newly founded INYO Broadcast Holdings, LLC for $30 million.
In July, the deal volume received a boost from a transaction that was sixteen months in the making. In March 2019, as part of the spinoffs following the merger with Tribune Media Company, Nexstar sold eight TV stations to The E.W. Scripps Company. The sale included the option for Nexstar to buy back one of the stations, CW affiliate WPIX-DT in New York. In July 2020, Nexstar announced that it had transferred that option to its partner Mission Broadcasting, which had exercised the option for $75 million plus accrued interest.
The third largest deal of the year was also the last deal of the year. In a transaction announced on December 31, the membership interests of Standard Media Group LLC (which owned two TV stations) was transferred from McDermott Communications to Paducah Television Operations LLC for $55.8 million.
The largest radio transaction in our estimates was a station swap announced in November. Entercom Communications Corp. traded two FM and two AM stations in North Carolina’s Charlotte-Gastonia-Rock Hill market for two FM stations in the markets of St. Louis, Mo. and Philadelphia, Pa. and an AM station in Washington, D.C., coming from Urban One, Inc.
We estimated each side of that trade being worth $14.0 million, which puts a higher value on this deal than any 2020 radio transaction with a disclosed price, demonstration the ingenuity potential buyers and sellers resort to in time when financing is hard to come by.
The only other large radio transaction of the year in which Educational Media Foundation bought Entercom Communications' WAAF-FM in the Boston market for $10.75 million was announced in February. It was the first large radio deal of the year and until the end of the year, it remained the largest radio transaction of 2020 with a disclosed price.
Our statistics do not include partial deals, thus, the buyout of a 64% stake in Univision is not included in the year’s total. Announced in February, Capital Partners LP and ForgeLight LLC announced the acquisition of this 64% stake in Univision from Saban Capital Group Inc. and other investors. The price was not publicly disclosed. Based on the estimates for Univision's 2020-2021 average cash flow, Kagan values Univision's 58 radio stations at $408.3 million and its 52 TV stations at $3.484 billion.
Adding 64% of that value to the 2020 numbers, the year’s total deal volume of 2020 would have reached $3.50 billion.