what will become of AM 1250 after loseing its Disney affiliate on September26th. Will they sign off? Will they continue carrying Disney programming?? Will someone by the radio station ?will they temporary carry another program program source? A site showed up on another thread, they are monitoring the Radio Disney affiliates throughout the United States and asking people to make comments about the programming on those stations.so far on the other Stations everything is status quo.stay tuned!
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1250 AM Pittsburgh
- Thread starter PHIL Z
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They want to let the staff go and shutdown the station later this month. If Disney is not going to need it, save the expenses. After 12 months of being off the air, the license will be deleted. I can't imagine no one wanting to buy the station. There have been a number of people who have shown some interest in it. My guess is it will be sold before the end of the year. Who knows what the new owner will do with it.
Yes, but...
They can come back on the air for a day or two, and then "rest" for another year while trying to sell the station.
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"Can" is one thing. "Will" is quite another.
If it should come to pass (which I highly doubt) that Radio Disney needs more than 365 days to sell 1250, I bet they will find some people, either locally or within their own professional umbrella, who will come in and run the station for a day or two rather than let the license die. At some point arguing simply for the sake of arguing sounds stupid. 1250 is a property of some value, what that value is the market has yet to determine, but the idea that they would simply drop the license because they couldn't sell the station within the arbitrary 365 days is ludicrous.
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The point of contention is how much that "some" value amounts to, and how that compares to the costs of keeping an asset on the books for tax purposes, sufficient maintenance to keep it in condition to be turned on periodically, etc. It is a very simple arithmetic problem to compare two known quantities. But when one of the quantities is simply "some", a vague amount at best, then there is room for honest speculation.
Do you know what sort of tax burden there is for keeping all of the assets of a dormant radio station on the books? Is it "a lot" or is it "a little"? Is it more or less than "some"?
An inactive station will not produce any taxable income... but that is a moot point in this discussion since it is unlikely that 1250 was making a profit anyway.
So the direct taxes paid would be ongoing property taxes and the like. Add in business licenses and permits, which are a form of taxation, and the direct tax burden is fairly small. Since all of that kind of tax payments are deductible as a business expense, the net effect is to lower Disney's overall income taxes... but by such a small amount as to be insignificant.
The other issue is in regards to amortization and depreciation. It would be assumed that upon turning off a station, Disney would take an impairment charge on the asset value (which is mostly intangible with a radio station) as the asset is revalued. This has been done in recent years by many broadcasters, particularly for AM stations and results in what might be called "fast tracked depreciation" which ends up as resulting in lower tax liability while not affecting EBITDA at all.
Assets are depreciated over time, and are considered to be pre-tax expenses in each year of the total asset life. If an asset is sold below its book value (purchase price less accumulated depreciation) then the difference is expensed, reducing tax liability.
Keeping a station silent is sorta' like having a rental property that is not occupied. You still pay for light, water, property taxes, upkeep, insurance, etc., but derive no income. You can deduct all the costs of maintaining the property from your income tax return, but the property is costing you money every month and you only save a portion of that due to lower overall taxes on the enterprise.
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But is the amount in question here "a lot" or is it "a little"? Is it more or less than "some"?
And, since you also know all things about everything, how do Allegheny county property taxes factor into the calculations? What about Pennsylvania's School District property taxes? Do you know how those work? Do you even know what Pennsylvania School District the property of WEAE 1250 is located in?
I was attempting to give some perspective on the overall cost aspects of taking a station silent. I've done due diligence on stations in at least 10 states, two territories and a half dozen foreign nations. In each case, the fist part of the process is to look at the relevant documents from the station being considered which are almost always provided with a NDA attached. So the issue is not about knowing the school district... it is about knowing what the station is currently paying for all relevant expenses.
Since I don't know the tax valuation for the WTAE-and-later-calls property, I can't look up the exact taxes. Were I doing due diligence, I'd have access to the tax data and could give a figure. Similarly, since business licenses are based in part on revenue, and we don't have the "package" for the station, we do not know the Radio Disney revenue that was allocated to 1250.
Since you have familiarity with taxes in the jurisdiction, you can do your own estimate. The directional system is only two towers and they are only 66° apart, so they might be using as little as 2 acres of land. But since the site was built long ago, I'd guess at about 4 acres to accommodate the radials for the 145° towers. The value of the construction on the land is likely very low for taxation, so finding the size of the land and the tax base will probably give you a good idea.
Let's say the taxes are $25,000 a year. Add in insurance (likely close to the same cost as taxes unless Disney self-insures), business license, grounds-keeping, tower lighting, maintenance of a main studio (could be the transmitter site) and a staffed office (being off the air does not obviate the maintenance of the Public File, although this could be kept at a lawyer's office or the like) and it's likely going to cost in the vicinity of $120 k a year to preserve the site and the license. The property taxes are only a small part of preserving asset value and maintaining the license.
Considering the possible value of the 1250 license, which is arguably the best day and night signal after KDKA, spending around $10 k a month to preserve the value is not a bad investment. Unless someone thinks that nobody will want 1250. But there are organizations such as Salem that lives this type of signal, so a deal will probably happen quickly. The amounts involved are so small that Disney will likely be a motivated seller; Disney gross income is close to 50 billion a year, so whether they get $800 k or $1.2 million (using the 1320 $1 million as a reference) matters very little when what they really want is to be done with it.
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I guess if you don't know the facts, then "perspective" is the next best thing.
But they did not do that with their New Orleans station...true it was a 1KW Class C on 1450 but still.....
As I said, nobody is going to have the complete picture of the facts as anyone who has all the facts is under an NDA.
The original question was whether it was going to be expensive to keep the station and retain the license while the station is silent, and my opinion as one who has done dozens and dozens of due diligence reviews on stations (and bought a few, too) is that it will be somewhere in the $10 k a month range to stay current on taxable real property, pay an and all fees, keep insurance going, maintain towers lit and in good repair and to comply with Public File and other requirements.
I gave an estimate based on considerable experience in precisely this kind of transaction and, while individual expenses may be a bit more or less, the average is going to be close to my estimates unless the towers are sitting on some very valuable real estate with correspondingly high taxes. In that case, the station is worth more dead than alive and turning in the license and selling the land is the smart thing to do.
You'd be surprised (and probably not believe) how many people there are in radio who can look at some basic data about facilities and determine valuations, possible margins and BCF and such. We don't need all the facts to be in the ballpark... and, as I have said, we'd be under an NDA were we to proceed any further in dealmaking.
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And you would be surprised (and probably would not believe) how many people who were experienced in any industry over a long period of time cannot or will not accept the simple facts that times have changed. The economic realities of the 20th century often do not apply in the 21st century.
At this point in history, I don't know how relevant the experience of someone who ran more successful buggy whip and/or vacuum tube manufacturing companies than anyone else did in presenting opinions about how to operate a business nowadays.
It all depends on whether they stay current and adapt to new technologies and trends.
That makes the unfair assumption that your particular "someone" has not decided that vacuum tubes are no longer practical in most situations and that buggy whips are obsolete. Your assumption that everyone is a one-trick pony is simply false. In other words, I don't listen any more to Bobby Vinton and Chubby Checker but to Pittbull and Iggy Azalea.
In any case, the calculation of the costs of maintaining a station silent have nothing to do with changes in technology but with real-time expenses such as maintaining tower lights functioning (they are 145° towers, so they must be lit), keeping the public file accessible and staying current on taxes and other fees.
By calling me an antiquated "old fart" you contribute nothing useful to a discussion of what DIS might do with 1250 if it has no immediate buyer in its pocket.
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I never used the term "old fart", but if the shoe fits...
And this particular digression of this thread is about comparing the cost of keeping a dormant station on life-support against the potential profit of a future sale. You've gone on and on with abstract theories about the cost of keeping the dormant station in mothballs, but you've said nothing about the potential proceeds from eventually selling that distressed and unwanted property to some poor schnook in the future. That's the outdated information I was referring to. In comparing the cost of mothballing a station against a possible potential future sale, you've said nothing about what the latter could reasonably be expected to be.
Do you know what the word "imply" means? You did a good job of making a stellar implication, buggy whips and vacuum tubes and all...
I specifically said that the benchmark was the $1 million sale of 1320. Since that sale is very recent (closing just last month), it's a good starting point. Disney is likely the more motivated seller but on the other hand is not in any immediate need of the proceeds. Renda may have wanted both the money and an exit from what likely was not a cash flowing station. Renda paid only $700 k for it in 1985, so they are actually coming out whole (neglecting the real NPV of $700 k).
So we can logically look in the same range for 1250 with adjustments made for the value of real estate and any other non-broadcast adjustments (such as revenue for tower space rental, etc). As I said, it is likely we see something from $800 k to $1.2 million. I have a suspicion that a group such as Salem or one of the several new Catholic owners may buy several stations in a package, and we might not ever know the individual value allocation.
Let's keep in mind that stations sold for stick value where the format is not ongoing or profitable the price is based mostly on population covered.
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Ray F.
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If it turns into a 24 hr church service, what good is it anyway? Nobody has made money with 1250 in the last 15 years.
It is October 2 and the station is still on the air with Radio Disney.
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