Tuning In On Evergreen Media

Some Wall Street biggies, including the aggressive hedge-fund manager Lee Cooperman, want to be on radio. What's doing in radio? Some of the best values and potential winners are there, explains Dennis Leibowitz, a veteran media analyst at Donaldson, Lufkin & Jenrette Securities.

Cooperman's Omega Advisors lately acquired an 8% stake in Evergreen Media, the nation's second-largest publicly traded radio-broadcasting company. All but one of Evergreen's 11 stations are in the top 10 U.S. markets.

Evergreen traded as high as 22 last year. But when the stock tumbled to 12, Cooperman increased his stake to 8%. Leibowitz thinks Evergreen "remains the cheapest among the radio-station owners, and we rate them very attractive," he adds. Evergreen's p-e ratio is 7, while a group of 10 rival broadcasting stocks has a multiple of around 11.

Based on this year's estimated broadcast cash flow and the location of its properties, Leibowitz figures Evergreen is worth 30 a share. He sees the stock hitting 22 this year.

The stock's fall from 22 to 12 was due to management's distraction from operations last year, when it was in the throes of financings, acquisitions, and diverstitures, explains media analyst Ed Atorino at Dillon Read, a New York investment outfit. Management's renewed focus on operations and programming improvements in Chicacgo and Los Angeles should enable cash flow growth to resume this year, he adds, and build long-term value.