RBR+TVBR Summer Special Report 2020 by RBR+TVBR

BROADCAST’S BEST FINANCE LEADERS The industry’s top radio and television finance executives, according to RBR+TVBR’s readers — now ranked

A KAGAN MEDIA SUMMIT ‘VIRTUAL’ SNEAK PEEK THE BEAT GOES ON FOR BROKERS, AND THE FCC IS ‘AVOD’ THE FUTURE OF TV? IF SO, WHAT DOES THIS MEAN FOR BROADCAST MEDIA EXECUTIVES? SU M M ER 2020 · RB R .C O M

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THE BROADCAST BEST FINANCE LEADERS OF 2020

ESSENTIAL INTELLIGENCE, VIRTUALLY ENABLED

THE BEAT GOES ON FOR BROKERS, AND FOR D.C.

IS AVOD THE FUTURE OF TV?

Leadership prowess. Fiscal skill. These are just some of the hallmarks of this year’s Top 15 broadcast media finance leaders. And, for the first time, the honorees are ranked. Who’s atop the list?

On June 18, the Kagan Media Summit was scheduled for a New York gathering. Because of the COVID-19 pandemic, two hour-long webinars are on the slate. S&P Global Market Intelligence Managing Director of Research Robin Flynn shares what’s on the agenda for these virtual affairs.

In January, the market for buying and selling broadcast media properties was lukewarm at best. Then came the novel coronavirus. While media brokers are seeing some significant fallout from the pandemic, in Washington the FCC marches on. Some key initiatives for radio and TV are in the works.

It’s advertiser-supported video on demand, or “AVOD,” that has become the shiny new object for marketers and media buyers. But, is that poised to come at broadcast TV’s expense? Or, can over-theair television actually benefit?

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The Broadcast Best Finance Leaders of 2020 In 2019, RBR+TVBR, the publication focused on the business of broadcast media, singled out for the first-time individuals who have demonstrated leadership prowess, fiscal skill, and the acknowledged respect of their peers. Industry response to our inaugural honors was highly positive, leading us to now rank the Top 15 Broadcast Best Finance Leaders of 2020. This year’s crop of honorees are singled out for their leadership and accomplishments by RBR+TVBR readers, with reader nominations — people who know the radio and television business from the inside — along with research and editorial evaluation determining our final list.

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As the COVID-19 pandemic restrictions further ease, preserving the fiscal health of all businesses has never been more important — to owners, employees and investors. The difficult decisions honorees are making on behalf of your organization are an even greater responsibility today.

came thanks to the January 2017 closing of its merger with Media General, and then a deal that was only made possible after the FCC negated the merger of Tribune Media with Sinclair Broadcast Group. Tribune’s former stations are now new “crown jewels” in the Nexstar family — KTLA-5 in Los Angeles, WPIX-11 in New York, and WGN-9 in Chicago. Carter played an integral role in bringing Tribune’s former properties into the Nexstar family. And, as the person overseeing all internal and external financial reporting; internal audit, compliance and controls; investor relations; and assisting in strategic planning, business development, mergers and acquisitions, Carter has indirectly helped Nexstar’s stock steer through the COVID-19 pandemic much better than other broadcast media companies. And Nexstar’s first quarter 2020 results beat the Street. With strong retransmission consent revenue and a highly positive outlook for political ad revenue, Nexstar could very well be on the road to a $100-plus stock by the time you read this. Before joining Nexstar in 2009, Carter spent 24 years as the Managing Director of Media Telecom Corporate Investment Banking at Banc of America Securities. In this position, he acted as the senior banker responsible for delivering bank products and services including M&A, private and public equity, high-yield debt, fixed income derivatives, syndicated financial products and treasury management for selected clients across the broadcasting, cable, publishing and media industries — including Nexstar. Carter began his banking career in 1980, serving for five years in various roles in Corporate and International Banking at a predecessor to JPMorgan Chase.

JIM RYAN

EVP/CFO, Gray Television

Tom Carter

TOM CARTER

EVP/CFO, Nexstar Media Group

Nearly 11 years ago, Tom Carter joined a broadcast television company poised for growth. Little did anyone know that Nexstar would, by mid-2020, become the single largest owner of over-the-air commercial TV stations in the U.S. This

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Gray Television has enjoyed remarkable growth since Jim Ryan joined the company in 1998, rising to a Sr. VP in 2002. He joined Gray following its purchase of Busse Broadcasting Corp., where he spent the prior 19 years in various roles, rising to CFO. Today, he’s skillfully navigating Gray, including all of the former Raycom Media properties, through the COVID-19 pandemic. Ryan says the challenges he’s dealing with every day have been twofold: learning to adapt to a rapidly evolving situation while remaining focused on Gray’s mission to serve its local viewers, and “maintaining clear, concise communication both internally

Fennell is a familiar face to those active in the last several years with the Media Financial Management Association (MFM). He served on its Advisory Board from 2016-2018. Fennell became CMG’s CFO in 2014, and prior to that was VP of Financial Planning and Analysis (FP&A) at Manheim, a Cox Automotive company. Before that, he held finance management positions in the telecommunications industry, with Verizon Wireless and AirTouch Communications. He started his career at T. Rowe Price, in Baltimore. and externally while in a highly dispersed work environment.” And, while the novel coronavirus’ economic impact has been severe, Ryan does not believe it will permanently alter investment in local TV broadcast media. Why? He’s been in TV since the October 1987 stock market crash, and has seen local TV adapt to every challenge.

BRETT FENNELL

CFO, Cox Media Group

While Tom Carter and James Ryan were on our 2019 honoree list, 2020 marks the first appearance for Brett Fennell. And it is thanks to a significant number of nominations. With applause from now-former CEO Kim Guthrie, Fennell was singled out by one RBR+TVBR reader as a “capable executive who understands all aspects of the business.”

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Lisa Knutson

LISA KNUTSON

CFO, The E.W. Scripps Co.

“Near the end of the first quarter, the global COVID-19 pandemic began to significantly impact the U.S. economy, and the company’s first-quarter financial results have been affected by these conditions.” That could be any media company. But in this case, it refers to The E.W. Scripps Co. , an entity that’s a bit unique compared to its peers. It no longer owns radio stations, but owns digital audio technology and measurement firm Triton, podcast brand Stitcher, millennial-focused Newsy, and digital multicast operation Katz Networks. All are seeing strong growth, even during the pandemic. Helping in the C-Suite is Lisa Knutson, who is one of several top-level executives to take a temporary 10% pay cut in midApril to help keep Scripps’ liquidity strong. “When it became clear in early March that our country was entering a pandemic, our Scripps leadership defined three

priorities that have guided our actions since then: to protect the health and well-being of our employees; to serve our audiences and communities thoroughly and energetically; and to maintain business continuity and strong financial stewardship,” she says. “We immediately transitioned nearly all of our local station and national media employees to working remotely. In addition, I am proud that Scripps has implemented $85 million of cost savings for this year without any furloughs or layoffs — and only pay cuts for top executives and the board of directors.” Yet, Knutson says the toughest part of being Scripps’ CFO has been navigating an uncertain financial path. “While it’s difficult to plan for the future in an environment of such unprecedented business disruption, past experience has taught me we needed to play out several possible economic scenarios in order to find our way.” Knutson has been at Scripps since 2005.

RICH BRESSLER

President/COO and CFO, iHeartMedia

Of the individuals who have placed on our Top 15 list, perhaps it is fitting that the top-ranked representative from an audio media company centered on the ownership of AM and FM radio stations is from the biggest player in that space. Rich Bressler has been the No. 2 executive behind CEO Bob Pittman at iHeartMedia since January 2013, and was previously Managing Director at Thomas H. Lee Partners. Before that, Bressler served as Sr. EVP/CFO of Viacom Inc., where he managed all strategic, financial, business development and technology functions. Bressler has also been EVP/CFO of Time Warner Inc. With a talent stable that is perhaps unrivaled, iHeartRadio continues to outperform in key markets including Los Angeles,

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Rich Bressler

Dallas and Boston, where iHeart stations took four of the top five slots in April 2020, according to Nielsen Audio overall PPM ratings. Meanwhile, iHeart stock is roaring back from COVID-19 pandemic-influenced drops. With a stock price of $17.82 prior to the novel coronavirus’ arrival in the U.S. in mid-February, all signs are iHeart will return to that level. It just depends on when, and Bressler will be a vital part of that recovery — just as he was through iHeart’s successful Chapter 11 restructuring effort.

“COVID-19 has presented a difficult operating environment mainly due to the broad-based impact it has had on our industry,” Molina says. “Everyone from vendors to advertisers, to listeners, to talent, to employees and their families have been significantly affected by the pandemic. This has made things that were once routine incredibly challenging. It’s also forced myself and the rest of the executive team to make difficult decisions as we work to actively manage our business and align our operations with the current environment.” While no one is certain what the “new normal” will look like, Molina believes the long-term future of broadcast media remains bright. “While the COVID-19 pandemic has presented unprecedented challenges, radio and television have once again clearly demonstrated their resiliency and importance as a communications medium,” Molina says. “Our leading audio stations and Mega TV have continued to provide much-needed entertainment to our audience. We cherish our audience and understand they know and trust our brands and have strong

JOSÉ MOLINA

CFO, Spanish Broadcasting System (SBS)

In January 2019, José Molina took the CFO role at Miami-based SBS. It was, perhaps, a move that made sense both for Molina and for the multimedia company superserving Spanishlanguage consumers that is led by Raúl Alarcón Jr. From 2001 to 2015, Molina served as SVP/Finance at SBS. He was a member of the company’s senior management team, and its liaison with the investment community. In between, Molina served as CFO at the now-defunct MundoMax, born out of MundoFOX — the bold attempt to launch a fourth nationally distributed Spanish-language broadcast TV network. Before that, Molina was EVP/CFO at Univision Communications’ Networks arm. Molina spoke with RBR+TVBR about what may be the most challenging aspect of his job through the COVID-19 pandemic, and whether he believes the novel coronavirus will permanently alter investment in broadcast media.

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José Molina

“Broadcast media held a significant place in people’s lives prior to COVID-19, and in many ways that connection has grown stronger. We believe the world on the other side of this pandemic will continue to consume, trust and rely on broadcast media as well.” — José Molina, CFO, SBS

connections with our on-air content and talent. Broadcast media held a significant place in people’s lives prior to COVID19, and in many ways that connection has grown stronger. We believe the world on the other side of this pandemic will continue to consume, trust and rely on broadcast media as well.”

VICTORIA HARKER EVP/CFO, TEGNA

In July 2012, Harker took on CFO duties at the company formerly known as Gannett Co. Today, she’s a member of a C-Suite TEGNA shareholders overwhelmingly support, based on their affirmative selection of TEGNA’s recommended board of directors nominees at the company’s 2020 annual stockholders’ meeting. It’s been a heck of a year for TEGNA, which saw Soo Kim’s Standard General swoop in and take a stake in the broadcast TV company that owns such stations as WUSA-9 in Washington, D.C.; KGW-8 in Portland, Ore.; and WGRZ-2 in Buffalo. Kim sought greater influence over TEGNA’s business plan. He didn’t get it. As such, Harker’s role — and influence — in bringing greater riches through TEGNA is perhaps more vital than ever. Before taking her current role, Harker served as CFO and President of Global Business Services of the AES Corporation, a global power company. From November 2002-January 2006, she was CFO of MCI Group.

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Victoria Harker

DAVID ATKINSON

Treasurer/CFO, Educational Media Foundation

The selection by many RBR+TVBR readers of Atkinson may surprise some. After all, EMF is the entity behind the KLOVE and Air1 Christian music networks — each of which is a donation-based nonprofit operation. Yet EMF has mushroomed to become the No. 2 licensee of radio stations in the U.S., behind iHeartMedia. It has an impressive array of properties in the top markets, thanks to savvy transactions. Among the properties now in the KLOVE network are the former WAAF in Worcester, Mass.; the former WRQX in Washington, D.C.; and WPLJ in New York. At the helm in afternoon drive on KLOVE: Jeff Detrow, a very successful host at secular radio stations in San Diego before joining EMF. Indeed, EMF has two uniquely popular offerings devoted to promoting a Christian lifestyle. And they were recognized by readers of RBR+TVBR who argued for Atkinson’s nomination as a write-in candidate. Atkinson shared with RBR+TVBR some of the challenges seen at EMF through the COVID-19 pandemic, and how it could further reshape the radio industry landscape. “As a listener-supported, nonprofit ministry, Educational

TEGNA salutes our own

Victoria D. Harker

Executive Vice President and Chief Financial Officer

Congratulations on being selected as one of the Best Finance Leaders in the media industry. Your leadership, vision and dedication are invaluable to all of us at TEGNA.

hope and encouragement. “In a season during which we’re accustomed to receiving, we were determined to give back,” Atkinson says. To EMF’s benefit, donors have been “extremely generous and supportive.” EMF was able to maintain a full workforce of 400+ team members. Looking ahead, Atkinson doesn’t believe the pandemic will have a persistent negative impact on investment in broadcast media. “There are still great opportunities available that should prove profitable, assuming the right acquisition metrics are being used,” he says. “We plan to continue to expand our reach beyond radio, staying true to our mission of creating compelling media that inspires audiences to have a meaningful relationship with Christ. We are committed to being good stewards of our resources and to helping people move closer to Jesus, especially now — when they are in search of hope.” David Atkinson

Media Foundation was faced with understanding how the COVID-19 pandemic would impact our main source of revenue — donations,” Atkinson says. “One of my greatest challenges as the CFO was reassessing our projections and re-estimating operating expenses and cash flow during a time of uncertainty. Once the magnitude of the pandemic became apparent, we quickly examined the possible financial impacts of the virus — not only on us, but on our donors and business partners as well. The wisdom of our leadership and board in maintaining liquidity through an operating reserve made our situation manageable.” While finances are important, one of EMF’s top concerns was also how to best care for its audience. It postponed its spring pledge drives and instead focused on delivering messages of

“One of my greatest challenges as the CFO was reassessing our projections and re-estimating operating expenses and cash flow during a time of uncertainty.” — David Atkinson, CFO, Educational Media Foundation

DAVE BESTLER

EVP/CFO, Hubbard Broadcasting

Sixteen years ago, Dave Bestler was settling in to his second month as VP/GM of Hubbard’s flagship FM radio station, KSTP-FM “KS95” in Minneapolis. He took the job after serving as Director of Sales for Cox Radio, reporting directly to Hubbard Radio President Ginny Morris. Today, Bestler is still working closely with Morris, as the head of finance for the family-run owner of radio and TV stations across the U.S. He’s well-respected by his peers, and was a writein nominee singled out as “a smart-thinking CFO with sales and General Manager experience. It is a very rare and effective combination.” In addition to his professional role as a member of the MFM-BCCA Board, Bestler is a newly elected member of the RAB Board of Directors. Dave Bestler

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Bestler began his career in radio in August 1989, as Assistant Controller for CBS Radio’s WCCO-AM in Minneapolis. He’d been a senior accountant at Ernst & Young, and the shift to WCCO sparked a 31-year career in broadcast media.

JOHN J. DRAIN

CFO, Hearst Television

On Oct. 26, 2016, John Drain was promoted to CFO at Hearst Television, rising from SVP/Finance. At the time, Hearst TV President Jordan Wertlieb singled out Drain for his “breadth of experience” and for “outstanding leadership” on many important aspects of Hearst’s business — including financial operations, strategic acquisitions and even the renovation of a historic train station in Omaha that now serves as the home for one of its prized possessions: KETV-7 in Omaha, one of the nation’s top ABC affiliates. Drain joined Hearst after serving as acting COO of Ultimark

John J. Drain

Products LLC and, before that, as the seven-year SVP of Finance and Administration at Comcast Spotlight. Earlier in his career, he served as CFO of the One-on-One Sports Radio Network, which in 2001 became the Sporting News Radio Network following its purchase by Vulcan Ventures. Drain has also been associated with KUTV-2 in Salt Lake City and the former WOKR-13 (now WHAM-TV) in Rochester, N.Y., and was CFO of Hughes Broadcasting Partners from 1991-1995.

GLENN KRIEG

Treasurer/CFO, Morgan Murphy Media

“The COVID-19 pandemic has created many uncertainties and challenges impacting my job.” That’s the straight-up reality facing Glenn Krieg, who this year celebrates 23 years as the head of finance for the familyowned and -operated media company in business since 1890. In an interview with RBR+TVBR, Krieg acknowledges that the two most challenging aspects of his job, given the economic wrath the novel coronavirus has brought to the U.S., are forecasting liquidity and capital resources.

Glenn Krieg

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“We need to pay attention to which industries emerge and thrive and how broadcasters communicate the value and the power of our media offerings.” – Glenn Krieg, Treasurer/CFO, Morgan Murphy Media

“Understanding the balance sheet, its leverage and liquidity going into this, was critical and formed the basis for human resource and capital expenditure planning,” Krieg says. “Prioritizing expenditures to best match uncertain revenue fluctuations has also been crucial.” Another priority for Krieg and Morgan Murphy has been the safety and security of its employees, and its systems. “Shifting the workforce to effectively work remotely has been important, and we are learning the drawbacks as well,” he says. “Training and directing new employees and keeping the group properly motivated in a difficult environment has required flexibility and attention.” Whether the novel coronavirus will permanently alter investment in broadcast media remains to be seen, as Krieg sees it. “Certainly, industry stock prices can be used as a guide to the future,” he notes. “But so much depends on the economy. The need for advertising, and the form of advertis-

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ing, adjusts as the economy adjusts. We need to pay attention to which industries emerge and thrive and how broadcasters communicate the value and the power of our media offerings.” As Morgan Murphy evaluates many recovery scenarios, Krieg and his colleagues have much to think about. But, he says, “I expect that we are an industry that has the ability to resume the successes we have seen, and that we will.” Morgan Murphy Media has been family-owned and -operated since its founding in 1890. While many in the radio industry are familiar with its group of stations in Spokane, the company is actually based in Madison, Wisc., where it owns flagship CBS affiliate WISC-3 and Madison Magazine, in addition to digital marketing agency Phase 3 Digital.

KENT NATE

SVP/CFO, Bonneville International Corp.

Nine years ago, Kent Nate was named to his present position at Bonneville, a company he joined in 1998 as VP/Controller. Nate has risen from within at the Salt Lake City-based company, and has served as VP/CFO of KSL-5 in Salt Lake City, the flagship TV station for Bonneville. Before joining Bonneville, Nate served as CFO of Covenant

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Essential Intelligence, Virtually Enabled On June 18, television industry executives from across the U.S. planned to gather in New York for the annual Kagan Media Summit. Alas, the event, for which the Radio + Television Business Report is the official media partner, was scratched from the calendar due to the COVID-19 pandemic and physical distancing restrictions. Instead, the S&P Global Market Intelligence team moved forward with making the event a virtual learning and gathering experience. The result of these efforts, led by Managing Director of Research Robin Flynn, are two hourlong webinars scheduled for 1pm Eastern on the original meeting date of June 18, and again on June 25. While Flynn is obviously disappointed that the original plan won’t come to fruition this year, she says, “We are really looking forward to keeping the industry informed and speaking to station owners about what they are seeing in the market, but doing it virtually so we can carry on our decades-long tradition.” The first webinar will comprise “our typical industry overview,” where Flynn delivers Kagan’s data and projections for ad dollars, retransmission consent revenue, viewing habits, trends in OTT, and what will transpire in the next year in the multichannel space. As one might imagine, the data has changed considerably since the start of March. “It has been an extremely volatile period, and things are really changing by the month,” Flynn notes.

THE STABLE CONSTANT While ad dollars and consumption of such media as radio have been volatile since mid-March, one thing sticks out as highly non-volatile: retransmission fees. In recent quarters, growth has vastly outpaced that of traditional ad revenue. In fact, for broadcast TV, retrans and political dollars will help keep revenue from severe collapses. For Urban One, for instance, a 58% year-over-year radio revenue decline

was seen in April, the company noted during its Q1 2020 earnings call. Second quarter pacings are down 58.1%. Does Kagan have data suggesting that retrans will overtake traditional ad revenue across the board in 2020, given the novel coronavirus’ heavy impact on marketing and media budgets? Flynn says this will be shared during the June 18 webinar, as projections were continually updated over the past several weeks. But, she admits, “For broadcasters, retrans revenues have been the steadying influence. They haven’t had the waxing and waning of the odd/even year phenomenon.” While broadcast TV has its challenges, the MVPD — a.k.a. cable TV service providers — and the “virtual” MVPD (such as Sling TV) — are facing significant struggles only fueled by COVID-19. A May 15 examination of traditional multichannel subscriptions in Q1 affirmed a steep decline, with 2020 looking grim for MVPDs. “At 2 million, it was both the biggest absolute and relative quarterly drop to date,” the report found. Certainly COVID-19 played a role, but did it only spark something that had been an issue long before the novel coronavirus arrived? Yes, Flynn can confirm, with the dip correlating to long-term consumer and industry trends. In turn, this will further fuel a fluctuating ad market and “be subject to more pressure,” as multichannel subs sink. Ad revenue volatility could perhaps be the hallmark of the June 18 Kagan webinar, with station owners conversing on one key topic: What do they expect for the remainder of 2020?

Robin Flynn

Following the overview, an industry Q&A that is designed to mirror what is usually seen at the in-person New York summit will be staged through the power of video chat. The speakers include Kevin Latek, EVP and Chief Legal & Development Officer at Gray Television; Emily Barr, President/CEO of Graham Media Group; and Brian Lawlor, President of Local Media for The E.W. Scripps Co. Each is expected to share what their respective companies have seen. “In many ways that is difficult to predict, because it depends on the pace of openings in various local economies, if we face a second wave of [COVID-19] infections, and other matters,” Flynn says. Political ad strength, and the return of live sports, are also factors. “We really want to hear from our speakers what they are hearing from their advertisers, and what they are hearing from their reps out in the field,” Flynn says. Other subjects include the somewhatdelayed rollout of NEXTGEN TV, due to COVID-19 restrictions on travel seen across late March, April and May.

THE LINEAR AND DIGITAL REVOLUTION The Kagan Media Summit’s second of its two webinars will focus on the evolu-

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tion of digital and traditional media advertising revenue. Moderating the panel is Naveen Sarma, the sector specialist for the U.S. Telecommunications & Cable/Media & Entertainment industry sector teams at S&P Global Ratings. Also on the panel: S&P Global Market Intelligence Research Analyst Seth Shafer, TVB President and CEO Steve Lanzano, and Shawn Makhijani, SVP/Business Development and Strategy for NBCUniversal Owned Television Stations and Emily Barr Kevin Latek NBC Spot. “The takeaways are going to be about Other categories getting an up-close what has happened in the ad market and examination include Insurance, and what is expected — what are the early “any kind of Direct Marketing,” which is trends we are seeing in Q2 and how will showing its might through the pandemic. that roll out for the rest of 2020,” Flynn National vs. Local advertising will be says. “How strong will Auto be? We know examined. that dealers have to move the cars off And, of course, the June 25 webinar the lot, and that there has already been will discuss the still-strong forecast for some aggressive pricing in many cases. political dollars. Expectations remain How will that translate into ad revenues high. “It’s just a question on how far that for stations?” will go,” Flynn says.

WHAT’S NEXT FOR BROADCAST MEDIA? When the COVID-19 shelterat-home rules began, it was expected that the MVPD industry would get a break in cord-cutting trends. That didn’t happen. With record-high unemployment, MVPDs saw their first-ever quarterly downward decline. “Clearly, there is just downward pressure all over the board,” Flynn says. “The fact that the economic turmoil is not over yet and we have to see how quickly states and communities can reopen, and what that means for jobs, that is really going to have an impact on the cord-cutting trend.” It will also play a key role in how broadcast TV recovers from its ad-dollar dip. Flynn and her team at Kagan will be watching.

IN MEMORIAM

Michael Gravino

Michael Gravino … a true leader, the get it done guy, intrepid, undaunted, but above all a friend to those he met. Gone but never to be forgotten. The LPTV industry.

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The Beat Goes On for Brokers, and for D.C. The deal-making climate for broadcast station owners wasn’t so hot at the start of 2020. Then came the COVID-19 pandemic. Three months later,

Eddie Esserman

what can be said about trans-

“I had a deal in the Southeastern part of the United States. The buyer had to enter into a new transmitter site lease, as a condition to close the deal. Where is the new transmitter site? It’s on top of a hospital. The last thing a hospital wants to worry about now is entering into a new tower site lease.”

actions? Well, they’re still happening. Meanwhile, FCC staffers haven’t missed a beat, even as shelter-at-home rules kept things “virtual.” Think back to January. Yes, it may seem like a year, rather than six months, given all the world has experienced since mid-March. At that time, challenges seen across the deal-making marketplace were plentiful — and particularly acute for the radio industry. According to Kagan, 94.4% of the $2.64 billion in first quarter media transactions is attributable to one deal — the 64% buyout of Univision Holdings Inc. by Searchlight Capital Partners LP and ForgeLight LLC. Based on estimates for Univision’s 2020-2021 average cash flow, Kagan values Univision’s 58 radio stations at $408.3 million and its 52 TV stations at $3.48 billion. This represents 52.3% of the station value Kagan estimated for Saban Capital Group’s buyout of Univision, in 2006. Subtract this transaction from the mix, and the deal-making marketplace looks as barren as the paper goods aisle at your local supermarket. The first quarter’s largest TV deal announcement with a disclosed price was the $15 million sale of Mega TV affiliate KTBU-TV in Houston from Spanish Broadcasting System to TEGNA. In the quarter’s top radio deal, Educational Media Foundation, the largest U.S. non-commercial religious opera-

John Garziglia

— Bob Heymann

tor, acquired longtime Entercom Active Rocker WAAF-FM 107.3 in Worcester, Mass., for $10.75 million. Could these transactions wind up being the biggest deals of 2020? We just don’t know. “I think the key word is ‘uncertainty,’” says Bob Heymann, the Chicago-based Director for Media Services Group. “I think that is what is driving everything in this difficult time that we find ourselves in.” Simply put: Buyers and sellers don’t want to move forward with such poor visibility on what’s to come in the next three

Bob Heymann

Lou McDermott

months, or six months, or nine months. “That has negatively impacted, significantly, the deal process,” Heymann says. And, for the foreseeable future, that’s going to continue. Up until the COVID-19 pandemic put a stop to non-essential travel and “normal” business activities, Heymann had been working on a few deals. What happened because of the novel coronavirus’ rampage across North America? “I had a deal in the Southeastern part of the United States,” he says. “The buyer had to enter into a new transmitter site lease, as a condition to close the deal. Where is the new transmitter site? It’s on top of a hospital. You can imagine … the last thing a hospital wants to worry about now is entering into a new tower site lease.” Needless to say, that deal has been put on hold indefinitely. Another transaction Heymann was working on involves two FMs and an AM in a Top 100 market in the western U.S. “I spoke with a number of buyers, and there were interested parties in moving forward with this acquisition,” he notes. “We hit mid-March, and there was just no way they could explain to me how they wanted to make an acquisition and invest funds given so much — and here is this word again — uncertainty.” By mid-April, radio station owners were reporting revenue reductions in the range of 20%-35%. “That is going to negatively impact broadcast cash flow, obviously,” Heymann says. “And in many instances I’ve been working with full-year 2019 financials that, under normal circumstances, would be very appropriate for determining broadcast cash flow for 2020. But, in all

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cases, there is so much uncertainty into exactly what a station’s broadcast cash flow will be that a buyer isn’t willing to invest in such uncertainty.” Heymann was also working with the owner of a group of radio stations in a Midwestern market — a dominant player that holds 60% of the revenue in this locale. Broadcast cash flow was “very significant.” Because of the question marks surrounding BCF, the asking price “that would have completely been a certainty” in January and February is now debatable. “Buyers and sellers just can’t move forward,” Heymann says.

AWAITING THE THAW For Eddie Esserman, Managing Director for Media Services Group, the dealmaking market can be summed up in one word: frozen. “There are some deals that are preCOVID-19 that are moving forward, although with some caution and care,” Esserman says. Just prior to the shelterat-home restrictions and pandemicfueled lockdown of most of America, Esserman took on three new deals. “By mutual agreement by the seller, we’ve decided to just put those on hold. Taking a new listing to market in this environment, and I tested this with some outbound calls, is just not smart right now.” Esserman spoke with RBR+TVBR in late April, at the height of the pandemic’s economic stranglehold. He was asked about what the deal-making climate would look like come late July, or perhaps late October. “I think three to six months is a really good time frame to try to focus, and it’s blurry at best,” Esserman says. “Some of that depends on how quickly the waves of this virus move through this country.” While late May saw throngs of people on the Ocean City, Md., boardwalk and at beaches in California, Esserman in late April pointed to the healthy business seen at his local hardware store in St. Simons Island, Ga. He also noted how auto dealers were bringing new cars to buyers’ homes. “Business will probably be different for the rest of the year,” he says. “Travel is certainly going to be different. And, when I think we emerge from this, we’ll emerge an altered society, with different

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“People don’t want to have a conversation about buying a radio station when they are trying to pay their employees, visit with their clients either on Zoom or on the phone, and have non-transactional conversations.”

done. It’s just a little trickier in our current environment. We’re still able to fly, so depending on the state and the area and the region, you can follow social distancing rules and wear masks if that’s required. Instead of 10 people on a trip, you’ll have two people — the chief engineer and, obviously, us. Maybe a representative from the seller will be present. It can be accomplished, but it may be a little bit more labor-intensive.” For McDermott, nothing beats face-toface meetings. “We were saddened that we were unable to attend the NAB Show [in April],” he says. “It’s both productive and enjoyable. For now, a lot of those conversations have been supplanted by Zoom calls and lots of time on the phone. It’s a small sacrifice to make when so many others are hurting so badly right now.”

— Eddie Esserman

FISHING FOR BARGAINS? habits and maybe different consumption patterns. In the fog of COVID, it’s hard to know. Buyers right now are as welcoming to my call as if I began with, ‘Do not hang up. This is about your extended car warranty.’ It was slow before COVID, and it has stopped right now. And I think that is good business right now. People don’t want to have a conversation about buying a radio station when they are trying to pay their employees, visit with their clients either on Zoom or on the phone, and have non-transactional conversations.” Lou McDermott, the longtime Vice President at Tucson-based media brokerage Kalil & Co., agrees that we’re in challenging times. But he also sees the activity at Kalil & Co. much like that of the Post Office — nothing is going to stop a deal from happening. It’s just a matter of when. “We’re continuing to operate as normally as possible,” McDermott told RBR+TVBR in early May. “We remain extremely busy, and I would say the biggest handicap right now to getting things done is physical due diligence. But it can be done, and right now that’s probably the biggest hurdle out there, from a nuts-and-bolts perspective.” Getting to transmitter sites and studios remains a critical stage in doing a deal, however. “People want to verify with their own eyes the assets they’re acquiring,” McDermott says. “It can be

Kalil & Co. has had its fair share of inquisitive parties sniffing out a good deal or two. “We’ve had a lot of calls from people looking to buy,” McDermott says. “I assume they are looking for bargains right now. But nobody’s really bit on the fire sale-type offer out there. Most of our operators are interested in shoring up their business right now and are looking a little bit further out when they contemplate divestitures.” In McDermott’s view, activity is on the brink of a ramp-up. A couple of closings are expected to occur this summer. Then there is the Q4 2020 bonanza that’s still in the forecast, with political ad dollars making radio and TV a strong BCF play. When deals return, McDermott believes the activity will progress much like the “reopening” of businesses and everyday activities across the U.S. While New York City may be the last place to see this, Missouri, Arizona and Georgia are leading the way in bringing people back to the retail fray. “All that is going to benefit from a pent-up demand for product, and ad buys are going to be a part of that demand,” McDermott says.

CAPITAL MOVEMENT Has the FCC been negatively impacted by the novel coronavirus? For noted D.C. communications law attorney John

Paul Rotella

Gordon Smith Photo: NAB

Garziglia, of Womble Bond Dickinson, the answer is an emphatic “no.” “I’ve been absolutely impressed by the FCC staff,” he says. “They are, just like all of us, working from home and dealing with all of the ins and outs of telecommuting and everything else — VPN connections that might be spotty, or microphones that don’t work. I’d say 90% of the contact I have with the FCC is just working flawlessly.” The only thing that has disappeared due to the COVID-19 pandemic: in-person meetings, held occasionally with FCC staff. As such, important votes on matters of keen importance to radio and television broadcasters have been held — including a vote on what low-power FM stations are able to do with respect to greater flexibility and reach. “LPFM groups for a long time have been asking for the right to use directional antennas as full-power and FM translator stations do,” Garziglia says. “This will help LPFMs particularly where they are in tight transmitter locations, in which they only have a very small area to locate.” And, thanks to a rule change, the FCC is allowing an LPFM greater room to relocate, should it choose to. “It used to be limited to a specified number of miles — I believe 5.6 miles,” Garziglia says. “Now, it’s pretty much the same as the other services.” The one thing LPFMs wanted that was rejected: a power increase from a 100watt maximum to the 250 watts allowed for FM translators. What are some of the other matters the FCC is actively working on? Stations can reduce power temporarily through the COVID-19 pandemic, lowering the electricity bill, thanks to a Commission OK. Meanwhile, a damaged economy from the pandemic may lead to regulatory relaxation. With the White House signaling wholesale rule changes that would

benefit businesses, “this could be an opportunity for broadcasters to make certain asks,” Garziglia says. Perhaps EEO regulations involving recordkeeping and documentation could be temporarily suspended. Then there are the FCC regulatory fees — something that has received much attention from state broadcasters associations. “I’m not sure that’s something the president can do by executive order, but it’s something to ask,” Garziglia says. The NAB has taken the lead on asking the FCC to put a freeze on higher regulatory fees for broadcast media. “I’ve spoken regularly with Chairman Pai during all of this, and he has been a steadfast advocate for removing outdated regulations on broadcasting, and we know that is apt to continue,” notes Gordon Smith, President/CEO of the NAB. “They’re going to be limiting, if not eliminating, many of the fees that normally are tacked on to a broadcast license, and we obviously really appreciate that. That is very real help at a time when broadcasters simply do not have the cash flow and the revenue to pay them.” Paul Rotella, head of the New Jersey Broadcasters’ Association, is also working hard to get the FCC to put a stop to regulatory fee increases — or to simply freeze them for 2020. “Last year radio broadcasters took it on the chin, with a 50% increase in fees,” he says. “That was devastating. Now, friends in the television industry are going to feel the same thing. Some of the stations have several hundred thousand dollars, if you can believe that, of increased fees for FCC budgeting purposes.” The NJBA has asked the FCC, and Congress, to take another look. “I think a move to raise regulatory fees during this time of economic catastrophe and upheaval, coupled with the precarious economic forecast, is just imprudent and would further hobble local broadcasters’ efforts to survive in the aftermath of COVID-19.” To be clear, Rotella is not asking the FCC to reduce or freeze regulatory fees for all broadcasters. Rather, a tiered approach to help broadcasters — through Congressional action — is what the NJBA seeks. Getting federal help for members while looking out for other key interests

is also on Rotella’s active agenda. “We’ve been supporting our local officials with a lot of free airtime and a lot of information resource advertising and COVID-19 announcements, so it is only fair that the country look at broadcasters playing the vital role we play as first informers.” He thanks New Jersey Gov. Phil Murphy, who has thanked local media in COVID-19 press conferences for their important role in offering information and entertainment to those across the Garden State. In Washington, Rotella has taken a forward-first role in working with New Jersey House Member Frank Pallone Jr., who chairs the powerful Energy & Commerce Committee, on championing legislative action of benefit to broadcasters. The House E&C Committee has full oversight over the FCC. “One of the things we’re working on is a fight against a performance tax, which we fight in every Congress,” Rotella notes. “It would devastate the local radio industry and probably wipe out half of the stations, and would decimate the Emergency Alert System, leaving vast holes while putting 2,000 to 3,000 people out of work. It’s a toxic performance tax.” For television, perhaps the biggest matter at hand involving Washington regulatory policy is a push by broadcast companies including Gray Television to seek a U.S. Supreme Court reversal of the Third Circuit decision that nixed the Commission’s 2017 relaxation of local broadcast ownership rules. Even with shelter-at-home restrictions in full swing and the health of Justice Ruth Bader Ginsburg on shaky ground, D.C.’s game players are moving ahead to ensure that Congress and its agencies, including the FCC, don’t stop moving. How regulators move forward with regulatory policy impacting radio and TV’s financial health will likely remain top-of-mind throughout the next several months. And, with concerns of a “second wave” of COVID-19 this fall, a new round of financial fallout is likely in the back of people’s minds. It only adds to the uncertainty of these times, as broadcasters diligently provide consumers with a public service found through no other source.

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Is AVOD the Future of TV? Advertiser interest in video on demand (VOD) opportunities is taking off. Should broadcast TV executives tick off another topic to tick them off? Nope. They need not be left out of the mix, says the Chief Technology Officer of Innovid. Jessica Hogue serves as the GM of Measurement and Analytics at the New York-based firm behind an “omni-channel” advertising and analytics platform expressly built for the television industry. She joined Innovid in April 2019 after a 13-year run at Nielsen, where she held senior positions in product leadership and, ultimately, sales. Early career stops after graduating from Pepperdine University include roles in sales for both Gourmet and Conde Nast. Today, Hogue is holding regular conversations with clients centered on how, as linear TV audiences shrink, broadcasters need to reposition and rebuild audiences in new ways. AVOD — advertising-driven video on demand — could be the answer. How, exactly, can that transpire? The Innovid platform does everything from enabling data for personalization to the delivery of that advertising experience, then measures it across every touchpoint where a consumer can enjoy video content. Thus, linear TV is very much a part of the mix. “If I think about the transformation of linear television, even the broadcast medium, over the last five or 10 years, we have certainly seen that appointment viewing and standard ad rates have been

UNDERSTANDING THE DIGITAL BASICS What is CTV? Don’t know what AVOD stands for? CONNECTED TV: Any content that is rendered on the TV appliance distributed through a connected device, such as Roku, Apple TV or Amazon Fire. AVOD: The services that are adsupported and available as apps in that environment.

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undergoing a major reconstruction with the rise of both SVOD and AVOD,” Hogue says. “In the last couple of years, broadcast and major media conglomerates have needed new ways to reach those audiences. Several years ago that meant taking the existing content and putting it on these devices, whether it was a mobile app or a tablet app. What AVOD presents for big broadcasters is an opportunity to also find viewers that were cord-cutting and weren’t necessarily going to find that content on those devices.” And with the big getting bigger — Gray Television gobbling Raycom Media, Nexstar Media Group acquiring Tribune Media, and Sinclair Broadcast Group getting RSNs from FOX as part of its deal with The Walt Disney Co. — the time to consider AVOD as an ad revenue generator couldn’t be better. That’s because companies like ViacomCBS purchased Pluto TV, while Tubi was purchased by FOX. “There is certainly a recognition, if you look at those major media companies, of the desire to have lots of different ways to appeal to lots of different audiences.” This, Hogue notes, doesn’t take away from the continued ability of broadcast TV to attract sizable audiences. Rather, AVOD can “round out” the portfolio by bringing in the cord-cutters. With MVPD subscriptions hitting rock bottom in Q1, according to Kagan data presented May 15, cable TV could be imperiled over the next decade. Perhaps bringing in-house extended libraries of content that may not be available on broadcast TV is a calling card for the over-the-air TV specialist, Hogue says. For a market like New York, where network O&Os dominate, building out an AVOD platform could easily be done. But what about mid-sized and small-sized markets,

Jessica Hogue

where O&Os are not present and broadcast TV companies may not have the same wherewithal to embark on such a build-out? Hogue points to the “ton of innovation” that’s happening at broadcast TV, fueled by ATSC 3.0 and NEXTGEN TV promises of “addressable advertising.” With this on the horizon, broadcast TV is already poised to embrace the addressable aspects of AVOD. Then there is consumer fatigue with SVOD — the Netflix and Amazon Primetype offerings. With COVID-19-fueled economic challenges perhaps muted by the big June “reopening” of the U.S., longterm ways to save money may lead more consumers to select an AVOD platform for consuming entertainment programming.

USAGE AND ENGAGEMENT In mid-March, the novel coronavirus attacked ad budgets with venomous force, perhaps mimicking its savage rampage through the New York Tri-State Area and other hot spots across the U.S. Now, the repercussions of COVID-19 are in full force. On the media buying and planning side, decision makers are being more mindful of how they must invest their dollars. Advertiser VOD platforms have proven to be a hot commodity. At Innovid, device usage and engagement in the ad formats are integral to how consumption of visual media is had. Since the pandemic, a 70% year-overyear increase in connected TV ad volume has been detected. This corresponds to increased viewing hours seen among those sheltered at home across much of late March, April and much of May. For marketers, taking advantage of the opportunity to “personalize” ads couldn’t be bigger. Where consumers spend their leisure time, even with businesses reopening, could prove enticing for the broadcast TV company looking to expand in an area with no expectations of a slowdown anytime soon. Says Hogue, “As long as people are stuck at home, they’ll crave the cheaper or even free content that AVOD enables.”

LEADERS Continued from 14 Communications; President of Hiller Industries; and as Director of Finance and Operations for the U.S. Ski Team. He began his career in public accounting with Arthur Andersen & Co.

MICHAEL DRISCOLL

EVP/CFO, Connoisseur Media

Since 1996, Michael Driscoll has worked alongside CEO Jeffrey Warshaw as the individual responsible for the banking and financial transactions at the radio broadcasting company that today comprises stations in Frederick, Md.; Fairfield County and New Haven, Conn.; and Nassau-Suffolk, N.Y. Prior to teaming with Warshaw on the mid-1990s creation of Connoisseur, Driscoll spent a decade as CFO of US Radio Inc., which owned and operated 18 radio stations across the country. In a conversation with RBR+TVBR, Driscoll shared that the most challenging aspect of doing his job through the COVID-19 pandemic “has been dealing with trying to keep my focus and the team’s focus on things we could control, as opposed to the constant drumbeat of things going on around us that we could not control.” With the majority of its radio stations and its corporate offices in the shadow of COVID-19 “hot spot” New York City

Michael Driscoll

and the city of New Rochelle, this has presented “major challenges” for Connoisseur Media — not only regarding the health of its employees but also concerning what Driscoll calls “the fast deterioration of the business.” That said, caring for Connoisseur’s staff has been a big priority. He says, “We have sought to put our employee’s’ safety and well-being and preserving the long-term value of the business in front of cutting costs to maintain the highest short-term profitability. It is part of the culture we have built … In my 30-plus years in this business, this COVID-19 crisis is nothing that I or any of my counterparts in other companies have comparable experience with. It is a real learning situation every day. We will get through it, but each day presents new and unique challenges. I believe that in the short term, investments in the business will take a hit, and transactions and financing will be difficult. But it will not permanently alter investments in broadcast media.”

PAUL RAHMLOW

CFO, Midwest Communications

In 1999, Paul Rahmlow joined Midwest Communications, the owner of some 82 radio stations across the U.S. In that time, he’s been a key leader at the boardroom table when discussing growth opportunities for the company — including its successful entry into Nashville. Before joining Midwest, Rahmlow held senior accounting positions at River Valley Bank and the Wipfli CPA accounting and consulting firm. He began his career with entry-level positions at E&Y and the tax department of small MVPD TDS Telecommunications, an ACA Connects member.

Paul Rahmlow

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Rahmlow was honored in 2019 as a Broadcast Best Finance Leader. “This recognition is really recognition for all of Midwest Communications and the great things we are accomplishing,” he says. “I thank you as does [CEO] Duke Wright and his family, and all of my staff. I couldn’t be on this list without their efforts and support.”

TOMMY TRUJILLO

SVP of Finance, Meruelo Media

While Meruelo Media may not be widely known outside of Southern California, the rapid growth of this Los Angeles multimedia company has been no secret to locals. Travel along Topanga Canyon Blvd. in the San Fernando Valley, and you’ll see billboards promoting its reggaetón-flavored “Cali 93.9.” Turn on the TV, and chances are you’ll easily scan up one of its two Spanish-language broadcast TV stations in L.A. And Meruelo Media is the owner of legendary Rock station KLOS-FM. With President Otto Padron at the helm and former LBI Media COO Winter Horton in a similar role at Meruelo, Tommy Trujillo has emerged as a nationally recognized financial leader. Said one nominator of Meruelo’s leadership, “They simply are not just talented — they treat company funds better than they treat their own!” Another cited Trujillo’s “dedicated, conscientious, disciplined and determined” approach to delivering “the right EBITDA.”

“From my point of view, there is no alternative. Broadcasters must reduce expenses to ensure their survival because the revenue declines will be long-term.” – Tommy Trujillo, SVP of Finance, Meruelo Media

Achieving those goals through a pandemic is certainly a tall order. But he’s up to the challenge. “The most challenging aspect of my job through the COVID-19 pandemic has been quickly reducing all expenses,” Trujillo says. “From my point of view, there is no alternative. Broadcasters must reduce expenses to ensure their survival because the revenue declines will be long-term. As a single-market station group we moved quickly to reduce expenses and are renegotiating agreements for the future. I predict all broadcasters have done the same or will do the same, and at drastic levels. These are difficult and honest conversations that must happen to financially lead through and survive this period.” Trujillo believes the pandemic will alter investment in media for the foreseeable future. He notes, “Across the nation, businesses deemed non-essential are being forced to close, millions of people have filed for unemployment benefits, and countless others have had their pay reduced. Broadcast media is not immune from Main Street. Their pain will be our pain. As such, this is going to be a long recovery for broadcasting. In addition, the pandemic has accelerated changes in the marketplace, giving our digital competitors a massive tailwind. Trends that potentially would have taken years to develop are happening over the span of months. With no place to go, people are at home consuming digital products. Advertisers will follow people, and right now the trend is digital.” ABOUT RBR+TVBR’s BROADCAST BEST FINANCE LEADERS: This second annual Honor Roll is produced from RBR+TVBR reader nominations, which were gathered in April 2020. Rankings are based on nomination totals, in addition to research and analysis by the RBR+TVBR editorial department. © 2020 Streamline Publishing Inc.

Tommy Trujillo

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