Are there stations that are not profitable that stay on the air? For example, 95.7 The Vibe in KC stays on the air despite very lackluster numbers across the board for many years (it has been about a decade since they actually did well.) There might be some demos that are worth advertising for though. However, many stations take YEARS before they get a format flip despite lackluster numbers across the board. Is there a reason why programmers are so slow to pull the plug?
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Low-rated stations that stay on the air.
- Thread starter tall_guy1
- Start date
My guess is because format changes are very expensive. Signing on new advertisers can take months or even years, and the delay might make sticking with an underperforming format worthwhile.
In the case of The Vibe, the issue is partly coverage. This is a rimshot, and it misses much of the Missouri part of the market. So they may consider that it does as well as it can, given the lack of total market coverage.
Keep in mind that not every station can be #1, and stations are part of clusters that aim for a diverse sales base. So The Vibe is owned by Cumulus, and they also own the #1 and #2 stations in Kansas City. But both of those stations are "classic." The Vibe aims younger. So as a cluster, they have a broad range of demos to sell.
This. And we need to get away from the mindset that ratings equal success. There are more stations than not who are profitable and successful with low ratings. Ratings are not some score at a game.
And stations that are part of clusters fill in needed specific demos so that the cluster can go for nearly all buys in some way or another.
I wouldn’t guess many but there had been a handful of individually owned or family owned stations that were already lackluster, and then the pandemic came and forced their hand into selling or shutting down the station.
Running the transmitter for most stations is not the major cost.
Yes, a 50 kw daytime AM in a smaller market will have an electric bill that might be 20% to 25% of its monthly expenses, but for most stations like a 1 to 5 KW AM with reasonably new solid state transmission gear the power bill will be less than the cost of, let's say, liability insurance. Or office rent. Or a part-time entry level employee. Or music licenses. I could go on, but electricity is just a small part of the core, unavoidable expenses of a radio station.
- Business Licenses, FCC Fees, other city and state fees
- FCC attorney retainer or average annual fees
- Music licenses (ASCAP, BMI, SESAC and "the new guy")
- Fire, vehicle, liability, business interruption and other insurance.
- Rent or property taxes.
- Advertising & Promotion
- Maintenance, refuse disposal, janitorial.
- Water, power.
- Telephone and Internet
- Artist and Label fees for streaming
- Equipment maintenance
- Vehicle
- Spare parts
- Contract engineer
- Sales commissions ( around 20% of your income will go between agency and seller costs)
- Tower maintenance / relamping / site maintenance or rent
- Office supplies, postage, shipping, invoice forms, etc.
- Accounting and CPA for tax filing
- Production library
- Donations and support of local organizations and fund raisers.
- Costs to do remotes, high school or local sports broadcasts
- Bad debts and collection costs for slow pays or no pays
- Random costs like replacing a broken office chair, another file cabinet, painting, fixing the toilet, etc.
- Broadcaster Association meetings at state and national level.
- Memberships in Better Business Bureau, Chamber of Commerce, NAB.
- Trade publications.
- Salaries. Few stations can run with just the owner, so sales, traffic/billing/accounting, production, talent for any local dayparts all have salaries. Add in FICA share, insurance, and maybe even 401-k
- And probably a dozen more things I forgot.
A sales exec with strong relationships and the skills that built them can bring in more cash flow than questionable accuracy numbers in a ratings survey.
This is just one of the variables, a huge one, that shows that there's more to it than ratings.
As mentioned, cluster strategy and specific market situations are in play, and then there is what some call untraditional or exponential revenue like heritage stations with events that have taken on a Life of their own.
This is just one of the variables, a huge one, that shows that there's more to it than ratings.
As mentioned, cluster strategy and specific market situations are in play, and then there is what some call untraditional or exponential revenue like heritage stations with events that have taken on a Life of their own.
In a cluster situation, the extra cost is minimal, and usually the "extra" stations play defense for the big stations. A small standalone, especially AM, can be vulnerable.
You are talking about two different kinds of sale. Ratings are used by agencies to achieve the reach they want for a campaign. The seller is secondary. On local sales, relationships are critical and make or break your efforts. But those are two differnt kinds of sales.
A seller does not bring in "cash flow" but "gross revenue". Cash flow is the difference between revenue and operating expenses, before depreciation, interest and taxes (EBITDA)
But if you want agency sales, you have to have a metric... or be a special niche like "the only Farsi station in the market" where the client needs to reach Iranians.
JeeperOne
Banned
That would fit KEZW AM 1430 tp a T with it's Adult Standards format (And later with an Oldies format as KRWZ after it moved from 950 to make rppm for KKSE-AM) before SOMEONE (In this case, Entercomm (Before it became Audacy)) had enough COMMON SENSE to realize NO music format was going to work
And with Denver being saturated witgh political talkers AND MAMMOTH KOA Radio, there was ONLY ONE way for Entercomm/Audacy to take the station - IF they played their cards right
That direction was SPORTS TALK
BUT in order to keep from going head to head with KKSE AM/FM (Where they would lose on the FM side) & KKFN 104.3 (A mammotgh its own right), 1430 HAD to focus on the TALK side of sports as the translator sister station on 103.1 BARELY has enough power to cover Denver).
With there being no De Facto CBS Sports Rado affiliation uin Denver, securing that was no problem. But the formation of the BetQL Network & continuous 24/7 programming has been A STRUGGLE for Audacy (It was once said that 1430 would even be the network's flagship station). In fact, it's been so much of a struggle that BetQL is even having to have some of its marquee shows ride piggyback on the Big Brother that is CBS Sports Radio & those stations who use "The Bet" moniker are having to depend on CBS Sports Radio when the BetQL Network isn\t on the air as such & the local stations aren't airing anything local
Mr Kelly is totally correct. Ztwins Renton Wa. excellent example.
This is a different question than what was in your subject line. There are plenty of low-rated stations that make money hand over first, like most sports stations and prepaid religious stations. If you're not profitable, you can't remain on the air indefinitely unless you have a lot of money behind you.
95.7 The Vibe makes a lot more money than you think it does. For one thing, it's run on the cheap. It has exactly one full-time local personality. Everything else is syndicated. I believe The Bert Show is actually syndicated through YEA! Networks (despite originating from a Cumulus property), but the midday and evening hosts are Cumulus products. My understanding is also that Cumulus has a group deal with YEA! to carry its programs. So, 95.7 The Vibe has no problem covering its costs and then some, though it may not be a cash cow.
There are plenty of reasons why someone might not pull the plug if something isn't making money. You might occasionally have the eccentric rich person who just finds radio fun and does it for his own enjoyment, but that's a rarity. One more common reason would be the perception that you will do well if you can just outlast your also struggling competitor. Another would be that format changes are expensive and tend to take awhile to make money. The reasons changes don't happen sooner are almost as many as there are struggling stations, but a lot of those stations that look to be struggling probably aren't really.
This. Just because the format you're running is losing money doesn't mean what you switch to will do any better. And, arguably, with re-doing logos, promoting the new thing, etc., you might actually end up doing worse.
Of course, we have to remember that since the time that the FCC required annual financials, half of all stations are not profitable. While no study has been done recently, with the decline in revenue and the recession, it is likely worse now.
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