As media brokers and consultants, we at J. M. Tillery & Associates, P. A. are often times asked various questions concerning property values, how to increase property value and the sales process. Some of the most commonly asked questions are listed here.

How do I increase the value of my property?

There is no magic in the equation, however, there are some common sense approaches to this question.

The key to the success of any media property is sales. Focus on increasing sales by not less than 8% annually over the next four years. This can be done by increasing your rates, expanding your available inventory, building an expanded client base through non traditional revenue sources including the internet or even identifying rental sources by leasing your tower space or FM SCA sub carrier.

At the same time, keep your expenses level to no more than a 4% annual increase over the same time period.

You will then see your net operating profit, e. g., positive cash flow, increase by as much as 18% annually. By following this common sense formula, your station value will double within four years. Since stations are valued based on multiples of positive cash flow, by doubling your cash flow every four years, this will result in doubling your property value within the same 4-year time frame.

Performance VS Potential? What do buyers really look for?

We often hear from small market radio broadcasters interested in knowing what their stations are worth. In many cases, owners want to sell us on the application of improved sales and management skills. They want to sweep current or past history under the rug and focus on tomorrow, They hope that we can then use the same sales pitch with buyers to deliver an outstanding price for their broadcast property.

Unfortunately for these sellers, buyers are just not that dumb. Buyers recognize that the best predictor of a station's value and potential is its recent history. They want to look at trailing cash flow, not projections of astronomical growth. Such claims are simply not believeable or bankable.

Buyers generally do pay something for improved signals.  But claiming that because a signal reaches a market that it therefore becomes a viable signal and justifies a price triple the current value is unrealistic.

Sellers should try to maximize the prices for their stations.  They need to focus on building cash flow which is the single best determinant of the price of a station when sold. The potential to upgrade a signal, switch to a more popular format or improve the sales effort are nice.  Believing that potential alone will double or triple the value of your stations immediately in the eyes of buyers, however, is not sound thinking. Cash flow is always better in the long run in valuing your stations.

What is due diligence?

Due diligence is the process of reviewing materials that are prepared by the Seller for the Buyer. These may include items such as descriptions of real estate, personnel lists, financial statements, contracts and leases, etc. These materials generally are attached to the contract for sale as Schedules.

How long does the sale process take?

Marketing the station can take from several weeks to several months depending on the property. Negotiating and drafting a contract for purchase and sale of a station can also take from several weeks to several months depending on the complexity of the deal. The FCC review and approval of the transfer usually take from 90-120 days.

How do you protect confidentiality of my station?

It is our standard practice both to place any prospective purchaser under a Confidentiality Agreement before sharing sensitive information concerning a property being offered for sale. In addition, we are very careful not to reveal the particular property to a buyer until we have qualified them as to both their interest in the stations and their ability to close a transaction.

How do you qualify buyers?

We discuss with them their specific interests and their ability to fund a purchase. We focus on learning where both their equity and debt will come from to close the sale. In many cases, we will speak directly to their banker and investors to assure our clients that the purchaser is qualified.

Will the FCC approve my license transfer during a license renewal period?

The FCC generally does not grant license transfers when the stations involved are in the midst of license renewal. A transfer may be delayed until the license renewal is granted. Buyers and Sellers often enter into a Time Brokerage Agreement to allow the Buyer to be operating the station and to allow the Seller to remove himself from daily operations as permitted by FCC regulations.