A few weeks ago, RubinBrown Leaders Larry Rubin and Jessica Sackman of the Media & Entertainment Group attended the Media Financial Management Association’s Annual Conference.
During the conference, a few interesting trends became evident. To assist our clients and contacts in the media industry, below is a summary of the latest trends that may be affecting your companies.
As was indicated in several of the conference sessions attended, radio revenue is projected to have single digit growth in 2012.
While the deal market did open up in mid to late 2011, sales of radio stations have dropped in the last decade both in volume of deals and multiples, from 13 times broadcast cash flow to 6-8 times broadcast cash flow in 2011. Financing is expected to remain a problem for small deals.
Television revenue is expected to see double digit growth in 2012, primarily related to political advertising and retransmission revenue. There is also been a comeback in the automotive advertising space.
As retransmission agreements have continued to grow since 2008, growing 30% in 2011, television broadcast companies will see growth in reverse retransmission fees. Similar to radio television multiples are averaging 7-9 times broadcast cash flow compared to multiples of 14 in 2005.
ASCAP & BMI License Settlement Update
The Radio Music License committee reported on ASCAP (American Society of Composers, Authors, & Publishers) & BMI (Broadcast Music, Inn.) license status.
ASCAP and subsequently BMI have recently reached a settlement for the new radio industry license for the term 2010-2016. In addition to increasing the coverage to include webcasting and developing new media platforms related to internet websites, smart phones and other wireless devices, the settlements are expected to return $75 million and $70.1 million in ASCAP and BMI industry credits, respectively, against 2010-2011 payments to 10,000 radio stations.
The BMI settlement just announced on June 11, 2012 will require Federal Court approval bringing to an end the more than two-year litigation. Look for further updates regarding the agreement in principal covering music performance rights for television stations in the upcoming weeks.
Accounting updates focused on revenue recognition and leases, both with changes still in proposal stages, as previously reported by RubinBrown.
As these proposals are finalized RubinBrown will continue to provide information on the new standards and how it will affect media companies.
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