TV Tangible Asset Appraisal

204 Pages·2011·0.42 MB·English

NEW JERSEY NETWORK TELEVISION STATIONS

APPRAISAL OF TANGIBLE ASSETS

AS OF DECEMBER 1, 2010

PREPARED FOR
STATE OF NEW JERSEY
DEPARTMENT OF THE TREASURY, DIVISION OF ADMINISTRATION

Project No. 4050131
15120 Enterprise Court, Suite 100
Chantilly, Virginia 20151
Phone: [phone] (cid:132) Fax: [phone]
www.bia.com

January 28, 2011

Mr. Michael Jonas, Operations Manager
Mr. Rick Williams, Assistant Director, NJN Engineering
50 West State Street, 8th Floor
PO Box 211
Trenton, New Jersey 08625-0211
Phone: [phone]

Re: Estimate of the fair value of the tangible assets, in place and in use, of Television Stations
WNJN(TV), WNJB(TV), WNJT(TV), WNJS(TV), and Television Translators W36AZ,
W49BE and W43CH, licensed to Montclair, New Brunswick, Trenton, Camden, Sussex,
Hackettstown and Belvidere, New Jersey, respectively.

Dear Mr. Jonas and Mr. Williams:

Pursuant to your request, BIA Advisory Services, LLC (d/b/a BIA/Kelsey) has prepared an appraisal
to arrive at an opinion as to the fair value of the tangible assets, in place and in use, that are
associated with Television Stations WNJN(TV), WNJB(TV), WNJT(TV), WNJS(TV), and
Television Translators W36AZ, W49BE and W43CH, as of December 1, 2010. Fair value is
synonymous with fair market value.

Based on the data, analyses, and conclusions set forth in the report that follows, it is our opinion that
the values of the appraised assets, as of December 1, 2010, are as stated in the following value
summary.

Respectfully Submitted,
BIA/KELSEY

Geoffrey C. Price
Vice President
BIA/Kelsey
Media Intelligence & Investment Resources
TABLE OF CONTENTS

VALUE SUMMARY .................................................................................................................... 2 
STATEMENT OF INTRODUCTION ........................................................................................ 5 
IDENTIFICATION OF THE PROPERTY ................................................................................ 5 
PURPOSE AND METHODOLOGY ......................................................................................... 7 
APPRAISAL CERTIFICATE .................................................................................................... 8 
RIGHTS AND LIMITING CONDITIONS ................................................................................ 9 
STATEMENT OF APPRAISERS’ INDEPENDENCE ............................................................. 9 
TANGIBLE ASSET OVERVIEW ............................................................................................ 12 
OTHER ASSET VALUATION ................................................................................................. 19 
EXHIBIT 1 .................................................................................................................................. 22 
TANGIBLE ASSET INVENTORY ......................................................................................... 22 
EXHIBIT 2 .................................................................................................................................. 24 
QUALIFICATIONS ................................................................................................................. 24 

BIA/Kelsey
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VALUE SUMMARY
New Jersey Network Television Stations
as of December 1, 2010
TOC WNJB WNJN WNJS WNJT
Appraised Appraised Appraised Appraised Appraised Appraised
Tangible Assets Value Value Value Value Value Value
Land $0 $113,423 $0 $109,494 $0 $222,917
Leasehold Improvements 4,418,288 0 0 0 0 4,418,288
Buildings 0 569,228 523,932 505,767 271,894 1,870,821
Towers 45,036 401,987 389,339 755,588 393,354 1,985,304
Television Antenna System 0 455,545 705,144 609,510 546,826 2,317,025
Television Transmitter Equipment 12,541 283,668 761,440 686,285 431,030 2,174,964
Technical Equipment 5,755,184 41,640 58,949 37,601 44,469 5,937,843
ENG/EFP Equipment 394,921 0 0 0 0 394,921
MMiiccrroowwaavvee EEqquuiippmmeenntt 550077,,002222 119999,,333388 223377,,447744 227799,,556677 11,,112277,,661111 22,,335511,,001122
Translator Equipment 0 56,079 0 0 5,609 61,688
Satellite Equipment 86,840 2,307 1,978 2,637 6,749 100,511
Two-Way Radio Equipment 1,903 1,883 1,530 1,619 1,216 8,151
ENG/EFP Vehicles 527,135 0 0 0 0 527,135
Program/Production Materials and Supplies 300,814 0 0 0 0 300,814
Furniture and Fixtures 503,454 652 413 739 6,440 511,698
Office Equipment 230,670 2 0 0 20,250 250,922
Test Equipment 27,090 10,686 5,095 6,125 48,496 97,492
Tools 34,810 95 4 23 5,055 39,987
Spare Parts 99,631 11,036 0 0 351,866 462,533
Total Tangible Assets $12,945,339 $2,147,569 $2,685,298 $2,994,955 $3,260,865 $24,034,026
BIA/Kelsey
VALUE SUMMARY
New Jersey Network Television Stations
as of December 1, 2010
TOC WNJB WNJN WNJS WNJT
Appraised Appraised Appraised Appraised Appraised Appraised
Other Assets Value Value Value Value Value Value
Promotional Materials $100 $0 $0 $0 $0 $100
Surplus Equipment 200 18,362 19,786 17,857 18,764 74,969
Total Other Assets $300 $18,362 $19,786 $17,857 $18,764 $75,069
TOTAL APPRAISED VALUE OF THE
TANGIBLE ASSETS OF NEW JERSEY
NETWORK TELEVISION STATIONS $12,945,639 $2,165,931 $2,705,084 $3,012,812 $3,279,629 $24,109,095
BIA/Kelsey
STATEMENT OF

INTRODUCTION

BIA/Kelsey
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Statement of Introduction

STATEMENT OF INTRODUCTION

BIA/Kelsey has been retained by the State of New Jersey to estimate the fair value of the tangible
assets, in place and in use, of Television Stations WNJN(TV), WNJB(TV), WNJT(TV), WNJS(TV),
and Television Translators W36AZ, W49BE and W43CH, assigned to Montclair, New Brunswick,
Trenton, Camden, Sussex, Hackettstown and Belvidere, New Jersey, respectively, as of December 1,
2010. These stations operate as part of the New Jersey Network, a statewide public broadcasting
network. This report is being prepared for financial reporting purposes.

In this document we have appraised the tangible assets of the aforementioned New Jersey Network
television stations. For this purpose, Mr. Sidney E. Shumate, a Broadcast Engineer contracted by
BIA/Kelsey, visited the New Jersey Network’s studios in Trenton and three of the stations’
transmitter facilities on November 18-19 and 22-23, 2010 to inspect the tangible assets and to
acquire data necessary for the appraisal. The tangible asset inventories for the remaining stations
were provided by the New Jersey Network.

The value of the stations’ tangible assets is based upon each specific asset’s replacement cost, with a
provision for observed depreciation or, where appropriate, the cost of comparable used assets of like
age and condition.

In the course of the appraisal, BIA/Kelsey was provided with equipment prices, industry related
data, and other information. In the course of the appraisal, the analysts relied on BIA/Kelsey’s
Investing in Television 2010, 4th Edition, Media Access Pro Television Analyzer and Coverage Map
Data; and other industry related data.

IDENTIFICATION OF THE PROPERTY

WNJN(TV), licensed to Montclair, New Jersey, is a non-commercial UHF digital television (DTV)
station, licensed to transmit on Channel 51 with an effective radiated power (ERP) of 200 kilowatts
(kW), with a non-directional pattern, at an antenna height above average terrain (HAAT) of 764 feet.
New Jersey Public Broadcasting Authority (NJPBA) also holds a Construction Permit (CP) for
WNJN, BPEDT-20080620ALF, to increase ERP to 443 kW at a HAAT of 778 feet.
BIA/Kelsey
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Statement of Introduction

WNJB(TV), licensed to New Brunswick, New Jersey, is a non-commercial DTV station, licensed to
transmit on VHF Channel 8 with an ERP of 17.9 kW, at a HAAT of 705 feet, utilizing a directional
pattern. Due to interference issues with WABC(TV) in the New York, NY market and WGAL(TV)
in the Lancaster, PA market, WNJB is temporarily operating under a Special Temporary Authority
(STA), file number BDSTA-20100107ADL, with 40.82 kW of ERP from an antenna HAAT of 715
feet.

WNJT(TV), licensed to Trenton, New Jersey, is a non-commercial UHF DTV station, licensed to
transmit on Channel 43 with an ERP of 46 kW, at a HAAT of 873 feet, with a non-directional
pattern. NJPBA also holds a CP for WNJT, BPEDT-20080620AGH, to increase ERP to 59.4 kW.

WNJS(TV), licensed to Camden, New Jersey, is a non-commercial UHF DTV station, licensed to
transmit on Channel 22 with an ERP of 197 kW, at a HAAT of 866 feet, with a non-directional
pattern. NJPBA also holds a CP for WNJS, BPEDT-20080620ALH, to increase ERP to 566 kW.
WNJT identifies itself as Channel 23, its former analog channel.

W36AZ is a UHF television translator licensed to Sussex, New Jersey. W36AZ is licensed to
transmit on Channel 36 with 14.6 kW of ERP, at a height above ground level of 53 feet.

W49BE is a UHF television translator licensed to Hackettstown, New Jersey. W49BE is licensed to
transmit on Channel 49 with 10 kW of ERP, at a height above ground level of 138 feet.

W43CH is a UHF television translator licensed to Belvidere, New Jersey. W43CH is licensed to
transmit on Channel 43 with 1 kW of ERP, at a height above ground level of 115 feet.

The tangible assets of Television Stations WNJN, WNJB, WNJT, WNJS, W36AZ, W49BE and
W43CH that the appraiser identified and inspected include: land, leasehold improvements,
buildings, towers, television antenna systems, television transmitter equipment, technical equipment,
ENG/EFP1 equipment, microwave equipment, translator equipment, satellite equipment, two-way
radio equipment, ENG/EFP vehicles, program/production materials and supplies, furniture and
fixtures, office equipment, test equipment, tools, and spare parts.

1 ENG/EFP = Electronic News Gathering/Electronic Field Production
BIA/Kelsey
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Statement of Introduction

PURPOSE AND METHODOLOGY

The purpose of this appraisal is to determine, as of December 1, 2010, the fair value of the tangible
assets, in place and in use, comprising Television Stations WNJN(TV), WNJB(TV), WNJT(TV),
WNJS(TV), and Television Translators W36AZ, W49BE and W43CH. This appraisal is being
prepared for financial reporting purposes.

Valuation of the tangible assets of the stations is based on industry guidelines and the techniques
described in Revenue Procedure 75-39. In valuing the tangible assets, the appraiser has considered
three approaches to value. These are the cost approach, the market approach, and the income
approach.

The cost approach is that approach which measures value by determining the current cost of an
asset and deducting depreciation, that is, physical deterioration and functional and economic
obsolescence. In its simplest form, it is nothing more than current replacement cost less all
depreciation.

The market approach is that approach to value in which recent sales and offering prices of
comparable properties are analyzed to arrive at an indication of the most probable selling price of the
subject property.

The income approach is that approach to value in which income generated by the subject property
is analyzed and projected over a specified time period and capitalized at an appropriate market rate
to arrive at the property’s value.

The appraiser has chosen both the cost and market approaches as most appropriate for the tangible
assets. The value of the stations’ tangible assets is based upon each specific asset’s replacement
cost, with a provision for depreciation or, where appropriate, the cost of comparable used assets of
like age and condition.

For the purposes of this report, the definition of fair value, in place and in use, is: the value of
property for a specific use or to a specific user, reflecting the extent to which the property
contributes to the utility and/or profitability of the enterprise of which it is a part.

BIA/Kelsey
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Statement of Introduction

The fair value, in place and in use, of WNJN, WNJB, WNJT, WNJS, W36AZ, W49BE and
W43CH’s tangible assets have been determined by comparing the assets, in place and in use, to that
part of the communications industry with a direct need and identical use for the specific asset.

The valuation of technical and non-technical equipment has been conducted on the basis of new
replacement cost less a provision for all forms of depreciation or, in the case of those assets readily
available on the used equipment market, the market approach. The appraiser used current
communications industry equipment prices appearing in appropriate manufacturers’ price lists and
catalogs, solicited current market data from dealers of used broadcast equipment, and relied upon
published used equipment price lists, catalogs, and listings in trade magazines and publications. The
appraiser also discussed current market trends with used equipment dealers/brokers and
manufacturers.

The in place and in use value of the tangible assets has been determined by taking into consideration
such expenses as design time, engineering, supervision, labor and materials for installation, testing,
proof-of-performance measurements, outside consulting fees, freight, administrative costs,
contractor contingency fees, overhead, profit, contractor quantity discounts, and capitalized interest
expenses.

Estimates of equipment depreciation are based upon further consideration of wear and tear from use,
loss of utility due to operational problems, and technological and economic obsolescence.

A summary of the asset values is set forth in the preceding Value Summary.

APPRAISAL CERTIFICATE

This appraisal of the tangible assets of Television Stations WNJN(TV), WNJB(TV), WNJT(TV),
WNJS(TV), and Television Translators W36AZ, W49BE and W43CH, licensed to Montclair, New
Brunswick, Trenton, Camden, Sussex, Hackettstown and Belvidere, New Jersey, has been made for
the purpose of expressing an expert opinion as to the fair value of the tangible assets, in place and in
use, of the stations, as of December 1, 2010.

BIA/Kelsey
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