Urban One Tops First Half Radio Deals As M&A Strategy Evolves.

The radio deal market may not have roared during the first half of the year when fewer than 200 stations were sold, but buyers are still to be found—and that trend continues into the second half.

BIA Advisory Services says Urban One’s just-closed $22 million Dallas deal to buy urban “K-104” KKDA and “Smooth R&B 105.7” KRNB from Hymen Childs’ Service Broadcasting holds the crown for the biggest sale so far this year. It is more than twice the size of the second-largest transaction, MARC Radio Group’s $9 million deal to buy three stations in the Lakeland-Winter Haven, FL market. Overall, BIA says radio stations sold in the first half of the year totaled nearly $112 million in value.

The pace of trading is also showing an optimistic sign for the second half. Hoffmann Media Group this month announced what has become the second-largest sale of the year, a $20 million deal to buy six St. Louis stations from Audacy.

BIA Managing Director Rick Ducey says those transactions may represent the end of one era rather than the beginning of the next. He believes radio buyers are increasingly looking beyond the value of broadcast licenses alone and placing greater emphasis on companies that have successfully expanded into digital media.

"We're going to move more into the land of what is that company's valuation," Ducey says. Rather than evaluating only a cluster's broadcast cash flow, future buyers are increasingly likely to examine streaming operations, podcast businesses, digital advertising revenue, local content assets and other media properties that contribute to enterprise value.

"It's not just radio anymore. It's media," Ducey says. "It's going to be an integrated cross-platform company."

That shift also helps explain why today's buyers continue pursuing carefully selected acquisitions instead of the sweeping consolidation that defined earlier decades. Companies aren't simply looking to add stations — they're looking to build enough audience scale to support growing digital businesses.

While larger clusters can create traditional operating efficiencies, they also aggregate audiences large enough to support more sophisticated digital advertising offerings. As broadcasters expand into streaming and podcasting, scale increasingly allows them to offer advertisers greater audience targeting while cross-selling inventory across multiple platforms.

That digital focus is also influencing how major broadcasters are reshaping their portfolios and balance sheets, with several companies turning to Chapter 11 in recent years to help set the stage for the new era.

"They're working to deleverage and trying to get some cash in as they figure out strategies and investments to move into digital platforms where the growth is going to be," Ducey says. Rather than signaling an industry retreat, he views many recent station sales as an effort to redirect capital toward businesses with stronger long-term growth prospects.

One of the clearest examples of that changing business model, Ducey says, is the growing importance of connected television advertising. He recalled speaking with an executive of a small-market radio company whose digital business had become a major contributor to overall revenue in an unlikely way. "I asked, 'What are you doing that's driving revenue growth?' They said, 'CTV. That's like 30% of our revenue now,'" Ducey says.

While the product may be digital, he argues local broadcasters retain a competitive advantage because they already have trusted relationships with advertisers. "Radio sellers have terrific relationships and they have feet on the ground,” Ducey says. “YouTube doesn't have local salespeople working those long-tail advertisers."

Ultimately, Ducey believes those evolving revenue streams will increasingly influence acquisition values for radio stations.

"If you look at a property," he says, "I'm not even sure I care what the valuation is of the radio station because I'm going to value this as an enterprise and look at its total ability to generate revenue." Buyers, he predicts, will increasingly judge broadcasters not by how many stations they own, but by how effectively they have transformed themselves into diversified local media companies.