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A Music Format on an AM Station -- Is 2012 Too Late to Launch This?

After whats happened in the industry since 2008, banks run when you mention financing a radio station, so the guy playing "hard ball" might soften up if you give him time (he does have cost, and if he has no revenue coming in, that hurts after a few years).

Any station is worth what a qualified buyer is willing to pay,, 8 years ago there were a lot of people that didn't care what the true value was of a station, they bought everything in site,,today, a buyer that can come up with money is hard to find.

I've actually seen a few deals lately where the buyer brought virtually no money to the table,,it was all owner financed,,,of course with that debt service who knows what will happen in the next few years.

andy
 
IMHO Any AM programming (music or not) must be a format that a FM in the market will not try to take away from the AM. The usually means such programming will not be a great revenue or ratings generator. Of course your "entry costs" should be a lot less, Such programming most likely will be sold to local buyers not agencies. This will mean you sales staff will have to be or been trained "to beat the street".

If I could not project a 20% payback on my investment I would not do it. AM's life expectancy is a debate, but I personally would want my money back in 5 years. After that it is all gravy.
 
Based on the information you offered, this station is not worth $ 400 k. The building may be worth that but we don't know that. You don't own the tower site which is a huge red flag also.

My friend just sold a pair of AM stations in an Arbitron rated community of Ohio. Selling price for both $150,000 total.

There are better deals to be had that the one you are being offered. The owner of the AM knows your hungry to own radio and thinks you're gonna pull the trigger. If he can't make a dime on the station it would be well-worth your time, to look at another property. You probably desire to stay in your area, but there are a lot of good AM stations available right now and are under-priced. The one you are looking at is probably worth about $100 k or less.
 
everydayguy:

A somewhat safer way to have music on your proposed AM would be for it to only play a supplementary role to another primary format.

In the market I live in (Providence RI)...the example would be 1320-WARL, a 5000 watt suburban station with a rimshot signal in its market.

The primary "format" is brokered time, but the "Timeless Cool" syndicated music service is used as filler during unsold hours.

http://1320warlradio.com/gs/
 
I'll chime in here. If the guy has no billing, no local programming and no local goodwill, the station is not worth much even if it has real estate. You need to look at real estate values. I know a station on million dollar land billing very little. The property taxes are a huge chunk.

If he wants to play hardball, he is like another owner I know. He let a guy lease the station for its monthly true operating costs. He gave, I think, 15% of sales over and above operating costs. The leasee was smart enough to sign a contact that he could buy the station anytime in the first 3 years at the high price the owner wanted. Within a few months he was leasing two of the guy's stations.

If he runs trades, you might clear his spots in lieu of the 15%.

Don't get stuck on this one station. You might snag a better one for the same or less money.
 
Back to the original topic - there is a small silent daytimer AM in Saint Augustine, Florida that is going back on the air playing oldies. WSOS 1170 has been sold and the new owner will have an AM as well as a soon to be had FM translator, so the original question may be answered right now. The new owner is a veteran radio guy and the area is skewed to the older side as far as demographics go, so who knows.
 
There are a number of small AM stations near the DFW area that from all appearances seem to be generating local revenue. These stations are niche music formats not available on FM. Formats include oldies (55-70), Classic Country, Classic A/C, Big Band/Show Tunes, and classic MOR.

All of the spots are "local" retail and for the most part the spot load is high enough to pay the operating costs. So if you run the right niche programming, run it lean and mean you can make a decent middle class income plus have a product that you can be proud of while serving the local community as well.
Local is the key...
 
I think Jay has it right. It is hard work, and you have to watch the expenses, but it can be done. In fact, most of the music that was recorded before 1970 or so was specifically engineered to sound good on AM radios. After all, that was what everyone was listening to. Even in the mid to late 70's, a lot recording engineers would actually check their mix by listening to their work in a car. Some studios even had a low power AM transmitter that would radiate in the parkinng lot, just for this purpose.

You might take that date as a hint when you are planning your format. ;)
 
One additional comment that pertains to all businesses, not just radio: Find out what the other guys are doing, and fill the void they are leaving unfilled. In other words, if your market already has two or three mainstream country stations, you probably don't need to start a new one, unless you can offer something that is completely different.
 
obviously finding a niche format is a challenge, but after that you have to look at how to promote the music. If its the old "music of your life" type programming, it might be setting up at senior citizens events, etc etc.

Then the critical part, finding people that know how to actually sell radio, not numbers. You will be looking for people with experience in unrated markets,,that are use to direct selling, selling results, not numbers.

Finding the sales people will be an ongoing challenge, but it can be done

andy
 
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