When Petrus Holding Company made a substantial investment in Connoisseur Media in July, the news garnered headlines in part due to the family name behind the investment firm. Petrus is run by the family of Ross Perot, Jr., son of the former presidential candidate and businessman with an estimated net worth of $4.1 billion. But the investment may be more notable as part of a growing radio trend, the rise of so-called “family offices.”
In the deals, investment companies operate for the benefit of one family and its close allies. Among them are Michael and Greg Frischling’s Steel City Media. The family-owned, second-generation, Pittsburgh-based operator marked its 30th anniversary last year with a $105.5 million acquisition of Wilks Broadcasting’s Kansas City cluster. “There are more of these out there than people realize,” says broker Glenn Serafin. “What I hear from most radio broadcasters is that they want to be better, not necessarily bigger.”
Chris Rowe, managing director at FourBridges Capital Advisors, also anticipates more family-based radio dealmaking. “A lot of the mom and pops will transition into larger regional broadcasters,” he predicts. As Baby Boomer-aged independent operators retire, “some of these mom and pops will be looking for their option to sell,” Rowe says. “And while there aren’t a lot of buyers in small markets, there are pockets of opportunity.”
Rowe also anticipates more private equity-backed radio companies, such as Community Broadcasters’ $2.5 million deal to buy 12 radio stations, 10 FM translators and three TV station construction permits from Miller Communications in South Carolina. Northwood Ventures, a Long Island, NY-based venture capital firm, provided the financing.
“As long as there is a lot of capital out there, low interest rates and a relatively decent economy where you can get good ad rates, that will propel the dealmaking forward,” Rowe says.
From Serafin’s vantage point, radio remains an attractive investment opportunity. “Radio is ubiquitous. It is the original wireless medium. It is agile in adapting to change. Programming is affordable. There are large pools of talent, both sales and air talent,” he says. “Profit margins can be very high compared to most other business. And we get terrific tax treatment. What’s not to like?”