One way to value a business that is being sold is in terms of multiples of earnings (EBITDA). Some rapidly growing companies can demand very high multiples. Companies in trouble may have multiples at 1 or below. The average for sales of private companies is about 5 times EBITDA. IN the TV equipment manufacturing industry we have seen significant consolidation at very low multiples - the first time GVG was sold the multiple was well below 2. WHen you see a multiple of 13.3 for a business that is said to be on the decline, it tells you a great deal about the industry that the business is in.
Craig http://www.broadcastingcable.com/article/CA6404372.html?display=Breaking+News Breaking News NY Times Co. Finds Stations Buyer By Michael Malone -- Broadcasting & Cable, 1/4/2007 5:30:00 PMThe New York Times Company has a buyer for its nine television stations, which it put on the block in September. Private equity firm Oak Hill Capital Partners agreed to pay $575 million for the stations. The deal, which awaits regulatory approval, is expected to close in the first half of 2007.
The sale price represents a 13.3 times multiple on $43 million of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), according to Prudential Equity Group analyst Steven N. Barlow. Analysts called it a good deal for the NY Times Company.
Oak Hill Capital Partners managing partner J. Taylor Crandall commented, "The New York Times Company Broadcast Media Group is one of the industry's most admired franchises because of its heritage television stations, its commitment to quality news and serving the local community, and its outstanding employees."
The nine stations, a mix of NBC, CBS, ABC and MyNetworkTV affiliates, are: WHO Des Moines, KFSM Ft. Smith, Ark., WHNT Huntsville, Ala., WREG Memphis, WQAD Moline, Ill., WTKR Norfolk, KFOR and KAUT in Oklahoma City, and WNEP in Scranton.
In 2005, the latest year BIA Financial Network has figures for, the stations had revenue of $157 million. According to the formulation used by the FCC, the stations cover 3.2% of the nation's TV households.
A spokesperson from the Times Company said the stations were unloaded to allow the company to focus on its "rapidly growing digital properties and newspapers." The Times Company's papers of course include the flagship Times, along with the International Herald Tribune and the Boston Globe. The company still owns two New York City radio stations and a host of Websites, including About.com.
Oak Hill Capital Partners, with offices in New York, Stamford and Northern California, was part of a consortium that unsuccessfully attempted to purchase the Knight Ridder newspaper company last March. According to its Website, Oak Hill has more than $4.6 billion invested in a wide range of businesses, ranging from restaurants to pharmacies to southwestern cable operator Wometco Cable Corporation.
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