Broadcast Towers

In the last few years, smaller tower companies have been reaching out to broadcasters with offers to purchase their broadcast towers. These offers are almost always unsolicited and come in the form of a sale/lease-back. A sale/lease-back is where the tower company purchases the tower but enters into a long term lease with the broadcaster to continue the use of the tower. The lease-back may be for a nominal value or it might be at standard tower lease rates. If the lease-back is at standard tower lease rates, the purchase price is higher. In essence, the broadcaster is just borrowing money with the obligation to pay it back over time in lease payments.

The tower companies like to target broadcasters because of the following reasons. First, with the downturn in station valuations in the last few years, some broadcasters are looking for capital to fund expansion or pay operating expenses. Second, broadcasters have started to realize that the broadcast tower itself is a non-core asset. Third, some broadcasters (especially smaller ones) tend to know little about tower valuations and thus make attractive targets. If you have been contacted by one of these companies with an unsolicited offer, you should recognize that the offer is almost certainly below market. You should also recognize that the tower companies’ default purchase agreement is written entirely in their favor.

If you are a broadcaster looking to monetize tower assets or you own a tower with broadcast tenants, talk to SteelTree about the best way to maximize value with the least liabilities. We will protect your long term interests in the context of a well-executed lease-back arrangement. We understand the nuances of the broadcast tower asset class and know the companies who are eager to purchase them at the highest amount.