Funding Cuts Begin Pushing Public Broadcasters To Consider Station Sales.

The loss of federal funding has led most public radio and television stations to take a fresh assessment of their spending and what it might take to survive the new financial reality. For some stations, one option they may need to consider is taking stock of which signals they want to keep and which may be better monetized through a sale.

“CPB funding just got clawed back. It is not coming back for at least four more years. It’s also true that underwriting and donation support have been waning for the past five years, so stations are facing a double whammy of ‘what does the future really look like?’” says Greg Guy, founder and Managing Partner of Tideline Partners. “My message to them is that it is better to find out now what their assets are worth, and what they can do strategically, whether it is selling stations or towers, because they’re going to need to make decisions.”

According to a financial modeling analysis by Semipublic, while two-thirds of public stations were at low risk of going dark before the cuts, the picture has changed dramatically. Its data-crunching shows about 15% of stations, including all the stations with over 50% reliance on federal funding, are now at risk of shutting down within three years. The financial threat is most dire for Native Tribe-owned public media (56% at risk) and Black-owned public broadcasters (35% at risk), with rural areas disproportionately affected.

Guy says he’s already hearing from public broadcasters seeking guidance. “I’ve gotten a lot of calls, mostly for valuations and strategically asking about their options,” he says. “So, there are definitely people already taking a look at it, and I know activity hasn’t really picked up yet since we’re just a few weeks from the announcement. I think very realistically that a bigger wave is coming.”

Since some public networks have multiple signals, Guy says that by selling non-core assets, the proceeds could potentially give an operator the money to make up for the loss of federal support and offer years of operating expenses. Guy doesn’t expect a “landslide” of assets coming to the market, expecting in many cases it will be a second or third station in the market that is spun off first, along with translators and repeaters, as they become a luxury a public media company cannot afford. “It’s going to be a tough decision for many, because it is balancing mission with the market,” he predicts.

Commercial stations are typically valued by the coverage and cash flow. But when it comes to determining how much a public radio asset is worth, it is more like a stick value and is based nearly entirely on a “per pop” basis, the amount of population the signal covers. But because most public radio stations sit at the noncommercial end of the dial, the pool of potential buyers is also more limited. Fortunately for sellers, religious broadcasters have been actively snapping up stations. Brokers say several religious groups remain in growth mode, and this could offer them a fresh supply.

Semipublic’s database shows the public radio stations most dependent on federal dollars are in rural areas. Four of the ten most reliant are located in Alaska. Guy thinks it will hard for some of those rural and small-market stations to find a buyer. It’s another reason why he recommends public broadcasters don’t wait.

“Get smart about what your value is quickly so you can make strategic decisions when that time comes, because that time is coming. It’s coming pretty soon,” he says.