Comparing values

[Ai4i]

A hypothetical question.
Three stations with stable legacy formats and nearly identical high ratings and bookings for many years.
One is a full class B or C FM that covers the market as well as any other FM, maybe even a grandfathered signal.
The second is an AM dominant clear with a good skywave, but high up the dial (WHAM, WOAI, WPHT).
The third is a 5Kw 24 hour single stick regional, below 600 Khz with an enormous ground wave (KVI, KQNT, KXSP).
Those are only examples of stations. We are not comparing markets or market sizes?
How would the values for the types of stations compare?
Perhaps the answer would depend on how spread out the market is?

 

[davideduardo]

A hypothetical question.
Three stations with stable legacy formats and nearly identical high ratings and bookings for many years.
One is a full class B or C FM that covers the market as well as any other FM, maybe even a grandfathered signal.
The second is an AM dominant clear with a good skywave, but high up the dial (WHAM, WOAI, WPHT).
The third is a 5Kw 24 hour single stick regional, below 600 Khz with an enormous ground wave (KVI, KQNT, KXSP).
Those are only examples of stations. We are not comparing markets or market sizes?
How would the values for the types of stations compare?
Perhaps the answer would depend on how spread out the market is?

Start by eliminating that which has no value.

1. Skywave
2. AM coverage outside the rated metro.
3. FM coverage outside the rated metro.

With rare exceptions, the AMs will have declining billing and ageing demos. The price will be based on what an AM is worth ove rthe next 5 to 10 years... and the declining cash flow.

The FM would be evaluated on how well the format holds up against web competition, its future demos, ability to monetize excursions into new media, etc.

You'd have to pay me to take the AMs. The FM is of considerable value, likely a multiple of 8 to 10 times current cash flow or, perhaps, leading cash flow based on an economic recovery.

 

[TVradioguru]

Like David, If I REALLY thought there was upside to being in the market, I'd buy the FM over an AM any day. That is assuming of course the FM was cash flowing something with coverage that covered the market, not a rim shot signal. If not, then I'll easily (and have) walked away from any deal that didn't pass the smell test.

Even if the AM was cash flowing pretty well, it will only be going down from that point. Unless one could package the AM station and flip to a PE group at a profit, I wouldn't touch an AM with your ten foot pole.

A lot depends on market upsides such as growth, types of businesses that advertise, population density, and who the competition is. For example; a market that relies on tourism or temporary labor, stay away. A market that has some large industry the recently laid off, or is scheduled to lay off a great deal of it's workforce =nope.

If the FM is number 15 in a 13 station market to begin with, it may take too long to overtake the competition with the risk of you're not being able to make a dent in the next five years.

As you can see, signal is just one small portion of the process.

 

[Ai4i]

The only reasons that I am just a little bit skeptical of this analisys (no spell checker in this PDA) are A) many AM powerhouses are still doing top booking, and B) if HD radio ever takes off in my fantacy world...

 

[davideduardo]

The only reasons that I am just a little bit skeptical of this analisys (no spell checker in this PDA) are A) many AM powerhouses are still doing top booking, and B) if HD radio ever takes off in my fantacy world...

AM HD: Never.

AM powerhouses: losing rapidly their sales demo listeners, billing declining much more than the national economy.

 

[Ai4i]

AM HD: Never.

;D But that's not what that Struble guy said ;D