4-4-2012
Managing Director of Equity Research for Wells Fargo Marci Ryvicker says the Entercom purchase of KBLX-FM in San Francisco is a smart move by the company. Earlier this week Entercom announced its intention to purchase KBLX-FM from Inner City, which has been going through a Chapter 11 bankruptcy, for $25 Million. Ryvicker said yesterday, "we view this acquisition as a smart strategic move. San Francisco (DMA rank No. 4) is one of ETM's largest markets in terms of revenue, therefore this announcement makes a good amount of sense to us."
Ryvicker went on to say that, "Given that ETM already has three stations in the San Francisco market plus the fact that Inner City was going through a bankruptcy proceeding, we believe there are likely synergies on both the cost and the revenue side, equating to about a 6-7x buyers' multiple, which is accretive given ETM's current valuation of 8.4x (blended 2012E/2013E). Running back-of-the-envelope calculations in our model, we anticipate that this acquisition is likely to be leverage neutral. We think this is a smart strategic acquisition that strengthens ETM's competitive position in the market place without impacting leverage."
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