Valuation of Broadcast Equipment

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Valuation of Broadcast Equipment
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State of the Broadcast Industry

• Limited to local over-the-air television and
  radio
• Regulated by the FCC - licensed
• Supported by advertisers FREE to the public!
• Approximately 35 TV stations and 400 Radio
  Stations

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State of the Broadcast Industry

• Ownership
• Varies from very large to one radio station

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State of the Broadcast Industry

• What was it in the 50s?

• What is it now?

• Very high margins
• Limits on ownership

• Bankruptcy
• Market capitalizations plummeted

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Advertising Revenues

• Television

• Radio

• Associated Press - 14 drop in 2009 to
  47,700,000,000
• 2008 was election year

• BIA 15 drop in 2009 to 14,000,000,000
• 9 drop in 2008

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Sinclair Broadcasting
Number of stations 58 Market capitalization on
August 10 - 213.06 million Debt at June 30, 2009
- 1,304.7 million
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Gray Television, Inc.
Number of stations 36 Market capitalization on
August 10 -23.82 million Debt as of June 30,
2009 - 786 million
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Young Broadcasting
Number of stations 14 Bankrupt In 1999, bought
KRON-TV for 823,000,000
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Change Over to DTV

• Congress imposed in 1996
• WRAL broadcast July 23, 1996
• What is HD?
• 16x9 format 720p or 1080i
• Dual transmission expense until June 12, 2009
• Capital
• Operating

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Change Over to DTV

• Extensions by Congress
• December 31, 2006
• February 17, 2009
• June 12, 2009
• Loss of viewers to cable and satellite
• Expense of digital translators to fill-in

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Digital Equipment

• Can process 16x9 format at 720p or 1080i
• Currently first or second generation

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Analog Equipment

• Cannot process 16x9 format, 720p or 1080i signal
  without conversion

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Analog Equipment

• Groups
• Removed
• Abandoned in place
• Still in use but up converted

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2009 Valuation

• 2009 Radio and TV Equipment
• Analog Television Broadcasting Equipment
• Life of 5 years with 10 residual
• Studio Broadcasting Equipment
• Life of 6 years with 25 residual
• Transmitting Towers
• Life of 25 years with 25 residual

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2010 Suggested Valuation

• Television Equipment
• Digital equipment
• Schedule B6 for broadcast equipment including
  transmitter and antenna
• Analog
• Removed - no value
• Abandoned in place
• no value for antennas and lines to antennas
• 2 on analog transmitters and towers (only use is
  as an analog TV tower)
• Still in use but up converted keep special 5
  year schedule from 2009

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Radio

• HD Radio Status
• Over 1,800 HD radio stations on air as of January
  2009
• Over 1,000 stations multicasting
• Slow auto sales
• Mercedes, Ford, Audi, Hyundia, Volvo, Kia, Scion,
  Mini, Jaguar, BMW
• Sirius/XM reported 2 loss of subscribers in
  first quarter 2009
• High prices of first HD radios

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HD Radio Status

• Like 1970s when FM (analog) radio originally
  took off with high unemployment and high gas
  prices
• FCC to consider higher HD Radio power which will
  degrade the FM (analog) signal

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HD Radio Status

• Electronic program guides in field trials
• Same standard adopted in Panama, Brazil,
  Dominican Republic, Indonesia, Jamaica, Mexico,
  Philippines, Switzerland, Thailand, and Ukraine

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HD Radio Income

• At present close to 0

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Suggested Radio Valuations

• Studio equipment use Schedule B6
• Analog transmitters and antennas (cannot be
  upgraded) use analog TV schedule with 10
  residual
• HD Radio only transmitters and antennas 10
  until changeover
• Hybrid transmitters use schedule B6