• by Wayne Friedman , February 3, 2012

The value of broadcast TV companies, as well as integrated media companies that include broadcast assets, have lagged the broader stock market gains in the last two years -- which confuses media analyst M.C. Alcamo & Co.

Cash-flow selling multiples -- earnings before interest, taxes, depreciation, and amortization -- have dropped during the last two years, according to  the media investment banker. Investors remain cautious about broadcast -- despite rising profitability, improved credit profiles, an excellent outlook for 2012 and audience trends all pointed in the right direction," stated Michael Alcamo, president of M.C. Alcamo.

Alcamo says this sluggishness is a mystery because usually media companies outperform other companies in a rising stock market.

For those pure-play broadcast companies -- those with TV and radio stations assets -- the average cash flow multiple at the end of January 2012 was 7.3, down some 32% from the 10.7 number two years ago.

For those integrated media companies -- those with TV, radio and nonbroadcast media assets, such as print, outdoor, for example -- the situation was worse, averaging a 6.0 multiple, down 25% from 8.0 in January 2010. Alcamo feels investors may be putting a lower value on those companies because many have poor-performing print and newspaper assets.

Looking at stock prices, the S&P 500 index, by the end of January 2012, was trading at 80% of its 52-week range. By way of comparison, the pure-play companies were trading at 64% of their 52-week range; the integrated media companies were at 61%.

The six pure-play broadcasters include: Belo Corp., Fisher Communications, Sinclair Broadcast Group, Grey Television, LIN Television, and Nexstar Communications. The five integrated media companies are Meredith Corp, Journal Communications, Gannett Company, E.W. Scripps, and Media General.