Selling Broadcast Towers | SteelTree Partners
In the last ten years, many tower companies have been reaching out to AM, FM, and TV broadcasters with offers to purchase their broadcast towers. The tower companies “dial for dollars”, contacting broadcasters directly using FCC registration data. Or a separate broker may reach out to the broadcaster, claiming they can get high prices if the broadcaster will let them sell the tower. Some brokers do not really broker towers; they have pre-existing relationships where they push the seller to one specific buyer. The seller may think they are getting the highest purchase price for their broadcast tower(s), but they will not really know because the broker didn’t distribute the offering widely.
Why Tower Companies Seek to Buy Broadcast Towers
The tower companies like to target broadcasters for 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. Fourth, many broadcast towers were built in urban or suburban areas and have multiple cellular subleases.
How To Sell a Tower but Keep Broadcasting
The typical transaction is done via a “sale and leaseback.” A “sale and leaseback” is where the tower company purchases the tower but enters into a long-term lease with the broadcaster to continue broadcasting from the tower. The parties negotiate the rent for the lease. A higher lease rate typically yields a higher purchase price for the tower but also commits the broadcaster to higher operating expenditures. A lower lease rate reduces the purchase price while also limiting future costs.
How Broadcast Towers Are Valued
Broadcast towers, like most tower assets, are valued on what is known as a multiplier of annual “tower cash flow.” Put simply, tower cash flow is rental revenue minus expenses. Expenses typically include insurance, taxes, ground rent, maintenance, utilities, and monitoring expenses. The multiple to be used varies depending upon the type of tenants on the tower and the credit quality. For the sale and leaseback of broadcast towers, buyers look closely at the creditworthiness of the broadcaster to determine the multiplier. Multipliers for annual tower cash flow generally range from 10 to 30 times.
How SteelTree Helps Broadcasters Get the Best Deal
If one of these tower companies has contacted you with an unsolicited offer, you should be aware 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, contact SteelTree about the best way to maximize value with the fewest 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 that are eager to purchase them at the highest price.
Don’t be one of those broadcasters who ends up having to move off the tower they used to own because they didn’t know what they were doing. Don’t trust a broker who contacts you out of the blue and promises you a specific amount. Each broadcast tower is unique, and we will help you find out which buyer has the most interest and best terms and conditions.