BIDS SAID NEAR $500 MIL. FOR LEE TV STATIONS

By: Katy Bachman

Iowa Company To Sell Nine Stations





by Katy Bachman



(Mediaweek) With bids expected to be as high as $500 million, all eyes are on the sale of Lee Enterprises’ TV properties, which could set the pace for future TV deals.



The Davenport, Iowa-based company collected bids yesterday for its nine TV stations from four potential buyers: Emmis Communications, Hearst-Argyle, LIN Television, and The New York Times Co.



Analysts estimate half the bids’ value is for KOIN-TV, Lee’s CBS affiliate in Portland, Ore.



The group deal comes at a time when the TV market has been hounded by lagging TV stock prices, the high cost of transitioning to digital, and less than stupendous advertising forecasts. “TV isn’t growing as fast and it isn’t as attractive as it once was. It’s why you don’t see as many TV deals,” said Mark O’Brien, vice president of BIA Research. “Then there’s the cost of digital. You buy a TV station and you’re not done spending money yet.”



Compared to recent sales of radio stations in equivalent mid-size markets, it’s unlikely the Lee sale will be a bellwether deal. Robin Flynn, senior analyst with Paul Kagan Associates estimated the $500 mil-lion price at about 11 times cash flow. “There are a lot of stations on the market and lots of inventory, so buyers have leverage,” she said.



Another analyst who requested anonymity said that owners that don’t have to sell are banking that things will get better. Lee, which put its TV group on the block March 1 to make way for the company’s focus on print, doesn’t have that luxury. It needs the cash to fund several print deals already in the pipeline.



“TV has suffered because its little brother radio has outshown it every which way it can,” said one analyst. “You have a superstar sitting next to the ugly duckling.”



Analysts expect the market to pick up with time. “The value of the TV spectrum is grossly undervalued,” said O’Brien.





Copyright 2000, Editor & Publisher.

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