Sparked by the global Smartphone revolution, the demand for tower space by wireless, broadband and data providers has driven up the price of towers to the point that Towers=Gold Bullion. Sounds too good to be true, but some media brokers recently told the Northern Virginia-based broadcasting publication Radio World that Broadcast towers are selling at multiples of cash flow 12 to 16 times and upwards of 20 times cash flow for towers with cell sites. Of course, this has excited cash strapped broadcasters and even broadcasters who are “in the pink,” operators that have plenty of money but are still fascinated by what’s going on in a business that really wasn’t a business not long ago.
More than three decades ago, Benjamin Hill discovered new revenue for his struggling AM station at 1580, WPGC. He cut a deal with then Bell Atlantic and agreed to let the carrier dangle equipment from the station’s towers in Morningside, MD, not far from what was then called Andrews Air Force Base where Air Force One is kept. Hill soon learned what a good deal it was for him, the station and the family who owned the station, the Marriotts. When they weren’t worried about radio stations, they focused on their hotel empire. Hill, who later became a kingpin in the CBS Radio universe, was among the first broadcasters to recognize there is not only gold in the streets, but up on towers, too.
Since then, the radio industry has undergone a tremendous national consolidation giving radio companies an opportunity to take stock of their tower inventory and package them up for sale to tower site real estate management firms. The radio stations then become clients on what were once their towers, shedding the headaches of tower management so they can focus on their core mission, programming and sales. One tower industry veteran told Radio World, “It’s easy for broadcasters to negotiate favorable lease terms as part of the original sale.”
For instance, continued the report, in 2015, iHeartMedia closed on a $370 million deal to sell hundreds of radio tower properties to Vertical Bridge. iHeart said the sale was structured as a sale-leaseback transaction and didn’t affect operations of its radio stations. When the agreement was announced late in 2014, iHeartMedia President/CFO Richard Bressler said the transaction would allow the broadcaster to “optimize our balance sheet and maximize liquidity.”
Boca Raton, FL-based Vertical Bridge, the largest private owner and manager of wireless communication infrastructure in the U.S., has been growing in leaps and bounds ever since. In March it picked up more than 100 tower sites and nearly 200 towers as part of the mega acquisition by Alpha Media of Digity, LLC. Founded in 2014, Vertical Bridge is a newcomer to the club. CTI Towers, SBA Communications and American Tower among others have long ago found a market in broadcast towers while a growing number of broadcasters are discovering the joy of selling their steel.
Radio World said, other broadcasters, including Cox Media Group and Beasley Broadcast Group, have recently sold off some tower assets. Beasley sold a tower in Augusta, Ga., for $1.3 million in December, according to the broadcaster’s 10K U.S. Securities Exchange Commission filing. Dave Siegler, VP of technical operations for Cox Media Group, said Cox sold all but one of its towers in 2015, to InSite Wireless Group, a tower operator that owns more than 1,200 wireless communications tower sites.
“Selling the sites did generate some cash, but it also allowed us to now focus on our content. We believe it’s really the most important part of being a broadcaster,” Siegler told Radio World. “The distribution of that content and dealing with the hardware is no longer our focus.”
Reader Interactions