Brokered Programming

[K8PLW]

Scenario: A 15kw DA2 signal spends what I'm sure is big bucks to relocate its transmitter site and build a new 7-tower array. The move now effectively places their signal into a major radio market (Detroit). They return to the air with a conservative talk format, however this quickly falls apart and within 6 months the station is broadcasting brokered religious programming 24/7. The station suffers from poor audio and frequently loses its satellite feed. The station has no associated FM translator, and doesn't serve any particular "Niche" audience.

This has continued for nearly 5 years unchanged. We've all heard signals like this, and I often think "What's the point?" Why would a station carry on this way? They must be profitable, or they wouldn't remain on the air, but its difficult for me to believe. Since I've never been on the "Business" end of broadcast radio, I'll ask those that have: Is 24/7 brokered programming really enough to "Keep the lights on?"

 

[Kelly A]

Since I've never been on the "Business" end of broadcast radio, I'll ask those that have: Is 24/7 brokered programming really enough to "Keep the lights on?"

Absolutely! For those AM stations who run it, that programming is likely the only viable source of income available. You ride that wagon until the wheels fall off, or you can sell the land under the transmitter site for likely more than the station value.

 

[b-turner]

Imagine this: you own an apartment complex with 100 units. A company comes to you and says they will pay you a decent profit and take care of every aspect of running that complex. They cover everything and they pay you for it. Your obligation is to provide the apartment complex, the broker does the rest.

I worked a station that was a daytime AM. We had a client for many years paying $25,000 a month to start and after a couple of years was $36,000 a month. I managed the station, working from home. My job: to be sure the transmitter was on, answer the phone during business hours, and tell my client anytime their programming was not reaching us. I had a contract engineer to call if we went down. I had to visit the office to dust here and there. Breakeven on the station was about half the amount we made each month once the studio rule went away.

In the same market, the number of stations that broker has driven the monthly rate down to about $22,500. Given an $18,000 breakeven (maybe $17,500), you can still make money.

Some say you're not serving the community this way but in reality you are very much so because you do not dictate the format but allow the marketplace to decide. Whoever leases you must have the funding from advertisers or listeners to survive. If the leasee is a success, they have plenty of cash meaning marketplace approval or serving the community.

As Kelly A says, it is the only option for many major market AMs, especially daytimers.

 

[b-turner]

The way we leased/brokered was: the licensee maintained the station and all the costs involved to operate it. The client was responsible for getting their programming to us and maintaining that part. Their monthly rate paid all the station operational and maintenance costs and provided a profit. This included a dedicated employee to watch the station and an engineer a phone call away. Some stations write contracts to say they want a small amount, say $5,000 or maybe $8,000 a month for the station but then they state operational and maintenance costs as dictated by the licensee are payable by the client monthly. Thus, if breakeven is $17,000, the client might pay $22,000 or $25,000 a month ($17,000+$5,000; $17,000+$8,000).

 

[Kelly A]

The way we leased/brokered was: the licensee maintained the station and all the costs involved to operate it. The client was responsible for getting their programming to us and maintaining that part. Their monthly rate paid all the station operational and maintenance costs and provided a profit. This included a dedicated employee to watch the station and an engineer a phone call away. Some stations write contracts to say they want a small amount, say $5,000 or maybe $8,000 a month for the station but then they state operational and maintenance costs as dictated by the licensee are payable by the client monthly. Thus, if breakeven is $17,000, the client might pay $22,000 or $25,000 a month ($17,000+$5,000; $17,000+$8,000).

What was the average contracted term?

 

[b-turner]

We normally did 5 year terms. Mostly we required 90 days paid in advance as a deposit or bit of security for the station. Another thing I insisted on was repayment of initial price breaks. Everybody wants you to reduce the rate by a huge amount without reaching the monthly rate you want until year two. I told them I'd do a break but they had to pay it back starting at 30 months. I'd get complaining and I'd say I'm not willing to take a loss for you if you aren't even going to pay me back.

 

[bigdonho]

One of the other advantages to brokered time is littl or no sales staff required. You sign 90, 180 or 365 day contracts and (other than just servicing calls) you were done with that client 'til before the end of the contract. You don't worry about ratings or promotions or all the other normal headaches.

 

[Mikey Radio]

We normally did 5 year terms. Mostly we required 90 days paid in advance as a deposit or bit of security for the station. Another thing I insisted on was repayment of initial price breaks. Everybody wants you to reduce the rate by a huge amount without reaching the monthly rate you want until year two. I told them I'd do a break but they had to pay it back starting at 30 months. I'd get complaining and I'd say I'm not willing to take a loss for you if you aren't even going to pay me back.

Question - How do stations that air mostly brokered programming protect themselves legally in the event one of the groups that purchased airtime on your station does something that ultimately gets you into hot water? Let's say, for instance, that someone buys time on your station and drops a string of F-Bombs or goes on a profanity-laced tirade and it gets reported to the FCC? Or if they say something that causes an individual to come after your station for libel or defamation. If they're still in a contract with you, you may have some recourse, but let's say the airtime was purchased by an individual and he/she skips town after the incident or if it's a corporation, they shut down immediately after? Are you left holding the bag legally and financially?

 

[b-turner]

Contracts address that as the client being responsible and that the station may cancel and keep the 90 day deposit. I've never had an issue. Anybody signing such a contract is real serious about what they're doing and has reasonable measures in place to prevent that. By the way, you can tell the fly by night types. The longer you talk to them the more they reveal about themselves. Most clients come via contacts so nobody brings you somebody that they can't vouch for. I always 'qualified' prospects and I was not keen on groups with no broadcast experience. The had better have a few years of buying time on stations or introduce me to their investors. Now, selling an hour or two once a week is a different animal. We are talking leasing the whole station.

There is generally no need for any staff or any studio/office. I managed a station about 5 years all by myself working from home.

 

[Ed Nielson]

I worked as production/traffic manager at WSRO (Ashland, MA) for a number of years. For the years just going to COVID, they were running brokered Brazilian Portuguese.

There are pros and cons to brokered programming:

Pro: It's easy money. You don't have to do the sales. If it's ethnic, chances are the client knows the market better anyway. Obviously you still have to do engieering, maintenance, etc. but you have to do those anyway.

Con: Let me preface this by saying that not every one of these "cons" will apply in every case, just that they could. I also don't think they necessarily outweigh the shorter "pro" list. These are just some observations I made along the way.

1. As mentioned above, many clients are not broadcasters, and are unaware of FCC rules. We actually had one brokered host receive death threats because he said something stupid. I feel that this is one area where stations need to hold some very intensive orientation classes.

2. Fraud: Again, this may not apply in all cases but here is the scenario: one of our clients (Party No. 1) did not pay his bill on time, but he was sub-leasing the time (to Party No. 2.) When No. 1 didn't pay his bill, he was taken off the air. When No. 2 (who had paid No. 1) came in to do his show and learned he couldn't go on the air, the entire situation came to light.

3. Working as a team: We were fairly fortunate I think, in that regard. But it is possible for clients to take the "taking care of number one" mentality. There is also the issue of sales. If one host goes to a business and signs them up for an ad campaign, it can cause confusion if the next host goes to the same client. Ultimately I suppose that is the hosts' problem, not the station's. This where the orientaton comes in: you all need to work together.

I'm sure I can probably add to this list at some point.

We were fortunate as well, in that the Brazilians did do some excellent sounding production.

 

[radioislife2020]

For sure. I know a station in Houston doing brokered programming for at least the last 22 years that I can remember they only have one employee, and everyone comes in pays for the time does their show, and runs their own board. If you have a decent signal people will pay. A market like Houston can charge $150-$400 for 30 minutes. If you are willing to sell to these fortune tellers, they will pay top dollar to get on the air.

 

[b-turner]

I don't know anybody getting $150 an hour in Houston unless you're selling an hour or two a week to somebody.

Ed Nielson makes good points. We had a 36 page manual they received and signed a paper saying they agreed to abide by it's contents. We detailed FCC Rules and content (ie: what you can or cannot talk about). We never allowed subletting of time. We did have a guy try to sue us for advertising he had pre-paid on a show that we cancelled for non-payment. We required them to use their own contracts, etc. They were not allowed to imply they were the station itself. We didn't allow hosts to cut down other programmers on the station. They will speak up and tell you although you can't understand a word. And listeners will complain no matter what. One guy called and threatened to come to the station and kill me but I said I was going to be out of the office but if he'd give me his address I'd stop by (a rare time my mind worked fast enough).

 

[Ed Nielson]

I also did work for WBIX (Natick, MA) for a time. This was a slightly different animal, as the format was (mostly) brokered business talk. Most of the clients were fairly easy to work with, and most of them got it. Of course it helped that they had their own set of regulations to deal with, such as SEC, FINRA, etc... so they understood about regulations. There was the occasional whining about certain national spots that would run during their shows. (We owned certain avails within the shows, and were compelled to run certain national spots throughout the day in return for the hourly "Ticker On the Tens" Dow Jones updates.)

Of course we had to deal with the occasional know-it-all, who was going to be the next big thing in talk radio. You know, the ones who know more about radio than you do. Just ask. We had one guy who did a weekend sports show and who insisted on running sound bytes he obtained from Boston Red Sox players promoting his show. Not a bad idea, but they were distorted beyond repair... in the end, he ran them... "money talks."

 

[radioislife2020]

I don't know anybody getting $150 an hour in Houston unless you're selling an hour or two a week to somebody.

Ed Nielson makes good points. We had a 36 page manual they received and signed a paper saying they agreed to abide by it's contents. We detailed FCC Rules and content (ie: what you can or cannot talk about). We never allowed subletting of time. We did have a guy try to sue us for advertising he had pre-paid on a show that we cancelled for non-payment. We required them to use their own contracts, etc. They were not allowed to imply they were the station itself. We didn't allow hosts to cut down other programmers on the station. They will speak up and tell you although you can't understand a word. And listeners will complain no matter what. One guy called and threatened to come to the station and kill me but I said I was going to be out of the office but if he'd give me his address I'd stop by (a rare time my mind worked fast enough).

i Did say for 30 minutes but pretty much that's the going rate on any Spanish AM station in Houston.

 

[b-turner]

There's a difference: the AM Spanish language stations are selling half hours on a format that has a built in listening audience. Time brokered stations simply sell the time and the client brings the audience. I doubt the stations you speak of would sell time for a Vietnamese language program. The time brokered station sells to virtually all types of programming and generally could care less who the programmer follows or leads in to. The objective is just sell the time.

 

[bigdonho]

I worked at a two station, brokered time cluster. One station was "Health and Life Style Talk" (vitamins and suplements, home helath care, etc.) and the other was "Financial" (anuities, investment advice, wealth management, etc.) Both stations used a 10 sec delay and had a live operator who occasionally had to hit the "dump" button. . Some progrmas came in remotely from the client's office. Some were pre-produced at our studios and others were done live. Some of the clients also turned around and sold spots within their programs to other people so they were twice brokered.

It was in the evening that things got wierd. Psycics, vanity radio, and so on. One woman ran a sex advice show that turned out to be ads for her weekend swinger parties.

All in all, both stations were very profitable and we had people waiting in line for time slots.